The Issue With Amazon’s Echo Show
When I first saw the Amazon Echo Show I had two (negative) gut reactions
- This is not innovation! I hope this bombs because it’s just an IPad with voice control on a black box. If innovation is ‘something different that has impact’, then Amazon missed the memo by releasing Echo Show. But we fawn because it’s Amazon. Tech folk will ascribe qualities to the product that were, as far as we all know, not part of the consideration set in building it. A friend pitched this idea in 2014 and I remember a few investors suggesting it was either not necessary or could be copied by any of the big firms. And now we’re all gushing over it…
- Amazon’s Echo Show Has Nothing To Do With Customer Needs!?!! It’s just another device that adds to clutter in the home. I can already call my family using Facetime!! So why do I need the Echo Show? Conversational UI (‘Alexa play Esperanza Spalding’) is great until you need to input instructions or sequences that make up a Skill (night time mode: Switch off the light, enable security etc). Amazon is just trying to get a device in the home to bypass voice input into Alexa (which is currently done) through Apple/Android devices. Does that improve my life?
As I suggest in my upcoming book ‘The Antifragile Grid’ (pre-order), the smart home?—?a home plastered with all sorts of Internet of Things devices that relay information to a cloud based service provider somewhere out there – is the next platform for capturing context, attention and intent. Like the internet enabled computer and the smartphones before it, the smart home enables the tech companies to harness all the information they can about you and I, to sell to the highest bidder (or in the case of Amazon, to get us to buy more products). And we know that ‘he who owns the customer (home), captures the prize’. Amazon, with all it’s smart home products, is trying to capture the home by focusing on convenience. But why? First we have to understand the possible areas of value creation in the smart home.
So What Does A Smart Home Actually Do?
Adding the words connected or smart in front of the word home obscures the fact that the things that truly matter to us, in said homes, are
The competition to provide smart safety in our homes is stiff; Ring, August, Nest Protect and a slew of other products are duking it out. Comfort, a more nebulous concept, is being provided through devices like Cree’s dimmable smart lightbulbs (and other smart lightbulbs), Sonos speakers etc. Convenience is where Amazon found their niche and snuck in with the Echo(and all it’s variations). As much as we can achieve all these things with IoT technology, the unfortunate situation we find ourselves in is that these devices now seem to be causing more clutter than addressing the needs we have. We now live in a world where a search for ‘Smart home’ on Amazon yields ~152k results.
For Amazon to add another frivolous and non-innovative product to that list smacks of something more than just a push for thin-margins-on-another-device. Or is it? What is the point here? Amazon is a company that has proven time and time again that it gets the long-term strategic approach to business. So there is something here…
Or is it Strategy?
The best strategies are simple and obvious. But only in hindsight. Amazon’s strategy here might be one of two. Either one, when the story gets told, will probably show cleverness that was obvious and impressive.
- Diversionary: Voice controlled assistance, for the home, was Amazon’s thing. When Echo launched, it wasn’t clear that adoption would be as massive as it’s been. Now everyone is building their own device. That 100% market share, it’s now more like 70%. And knowing Jeff Bezos’ approach to competition, he doesn’t like that. A great way of weakening your competitor is by taking actions that, on the face of it, seem strategically directed at capturing a new market but are actually intended to increase your competitors costs to compete. Especially if you are the market leader in a space. The Echo Show makes sense as a diversionary tactic to impose costs on Amazon’s competitors (Google, Microsoft and Apple) who are all releasing products that compete directly with the original Echo.
- Platform vs Product: Technology is moving at a pace where products and services now become obsolete much quicker than ever before. The Echo Show would suffer this fate, like most other products, if it weren’t part of a broader platform strategy for Amazon. Successful platforms become the standard. To continue along the same path as everyone else, would be to start a voice activated device price war. No one wins a price war in a market that is still in its very early days.It is too early in the life cycle of voice activated devices for fighting a price war. A price war to own the platform would not be out of the question but would erode margins that are still robust enough for everyone to make solid profits.
I have little insight into what the strategy is here, I’m not in and know no one in Amazon leadership, but what I do know is that this has more to do with a competitive strategy than game-changing technological innovation. Because Amazon’s Echo Show is really just an iPad with voice control. The same can be said about Amazon’s Look and Dash. There must be a strategic reason for releasing these products at the pace Amazon seems to have been doing over the last few months.
One other thing I do know is that, despite my protestations above, I’ll probably end up with the Echo Show in my home. Just like I ended up with the Echo…
originally published here