Among all the other things Amazon (NASDAQ:AMZN) is doing, it’s giving birth to a new operating system for everyday life. Specifically, its focus on the “automated home” is yet another reason AMZN stock has been thrust into the spotlight over the past few years.
Alexa, the speaking interface it built into smart speakers six years ago, is the “MS-DOS of 2020.” It’s a fascinating, maddening new way to deal with the world.
Alexa is the tip of Amazon’s cloud spear, providing service based on what its users say. The company’s hardware event, held in September this year, has become a software event, with new skills and capabilities announced that drive users crazy. They’re designed to transform life, from a world of making decisions and pressing buttons to having needs intuited and work done automatically.
Bottom Up Programming
PC operating systems were built 40-years ago around applications introduced by start-ups. Programs like Wordstar, Visicalc and dBase eventually became today’s office application suites.
Amazon is trying to jump start that kind of process with Alexa software.
It’s offering cash to developers who can take the Alexa interface beyond voice, using a Web API and Presentation Language. It’s making these routines shareable, so if you figure out how to combine morning tasks other people don’t have to learn it. It’s making Alexa conversational to automate the use of social apps like Twitter (NYSE:TWTR).
The idea is to build an army of developers who personalize use of both edge devices and cloud software. Along the way, Amazon is de-emphasizing “skills,” like turning on music, in favor of routines like building shopping lists or getting up in the morning.
Where It All Fits
PCs were originally stand-alone devices. Adding a modem made them network edge devices. Then in the early 90s they became the center of home networks. Finally, with the internet, they became part of the global network.
Amazon is building this same infrastructure into Alexa, only all at once and without wires. As a speaker, an Alexa is an edge device. When connected to a coffee maker, it’s the center of a home network. Through a mesh design called Sidewalk. Alexa devices like Ring doorbells can be connected to others for mutual protection. Amazon is promising layers of encryption for privacy, but it’s a delicate dance that has just begun.
Cloud vs. Cloud
Alexa isn’t the only spoken interface, just the leading one.
The voice operating system war is a three-way race between Amazon, Apple’s (NASDAQ:AAPL) Siri and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Assistant. This is also how PCs evolved, with multiple operating systems building applications and interfaces so that you now have a Windows world, an Apple iOS world and a Google Android world.
It’s a market battle that can only happen among scaled competitors, built around a dance among clouds, software and hardware. As the leading edge of operating systems, it’s a key battleground for all three. It’s also a battle between the private interests of the players, the desires of consumers and the interests of government. This is the real reason the Cloud Czars aren’t as absolutely against regulation as the internet industry was a decade ago. With voice interfaces, regulatory capture becomes part of building public acceptance.
The Bottom Line for AMZN Stock
Interfaces like Alexa can save lives by extending the network’s use into a world beyond keyboards and touch interfaces. Most people can talk.
But they’re also part of building a new computing world, where networked computing is ubiquitous. It’s only one front in what I call the Machine Internet, through which computing will evolve during the coming decade.
Right now, Cloud Czars like Amazon are the way for investors to play this. But as we learned with PCs, many software and hardware companies will emerge and evolve with these new operating systems.
At the time of publication, Dana Blankenhorn had long positions in AMZN, AAPL and MSFT.
Dana Blankenhorn has been a financial and technology journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn.
