Amazon just upped the ante in the battle of the virtual assistants

Yesterday, at a pre-emptive event in Seattle, Amazon introduced new Alexa devices to keep its lead in the battle for the smart home. Google is having its own hardware event on October 4.

Amazon introduced six products. First and foremost, it presented a more compact, cheaper Echo with better sound. It comes in six different colors or skins. It starts at $99, which is much cheaper than the original Echo’s price ($179). Many people will likely compare this price to Apple’s forthcoming HomePod and opt for the less expensive device.

The company also introduced Echo Plus, which is being marketed as a smart home hub. The device looks like the original Echo but is also less expensive at $149 and includes upgraded speakers. The $99 Echo also works as a smart home hub, but the Echo Plus includes additional hardware that reportedly makes smart home device connections easier and entirely voice-activated.

The novel Echo Spot is a rounder, smaller version of Echo Show. It’s like a Dot with a screen but looks like an Alarm Clock that would sit beside your bed. It has a 2.5-inch screen to provide visual information and will cost $129. It will also support video calling.

Speaking of which, the Echo Connect is a square black box that looks like Apple TV. It allows Echo devices to make calls to any phone and is designed to play catch-up with Google Home, which can already do that. Current Echo devices can only call other Echo devices or smartphones with the Alexa app.

It will cost $35 and is a kind of retrofit for current Echo owners. Next-gen Alexa devices will have this capability built in.

Perhaps the most curious of the products unveiled are Echo Buttons, which connect to other Echo devices but enable families to play games together. They will cost $20 each and are reportedly the “first of many Alexa Gadgets” that will connect to and extend Echo devices in “fun and playful ways,” according to the company.

The final two announcements yesterday were an enhanced Fire TV with 4K support ($70) and Alexa integration into BMW vehicles. Even though Amazon doesn’t have a successful smartphone, it’s trying to keep pace with distribution of Apple and Google virtual assistants in the car.

Google is expected to make a number of virtual assistant-related announcements next week. On October 4, Google will reportedly be introducing its answer to Echo Dot, the $49 Google Home Mini. It will also be rolling out a Home device with improved sound called the “Home Max” that will compete with these improved Echo devices and Apple’s forthcoming HomePod.

Amazon has had great success with Alexa devices and is getting more aggressive by rolling out many devices at more price points. In this way it’s like the anti-Apple, which would be more careful and selective about what it introduces, wary of potential failure.

Amazon is innovating quickly and trying things. Some of these new devices will fail, but some will succeed. There are as many as 20 million smart speakers and virtual assistant devices already in US homes, with predictions that the number will grow to 30 million by the end of the year. With all these competing new offerings, I suspect 30 million may be conservative.

Looking narrowly at just these smart speakers, one might find all the new Amazon devices frivolous, unnecessary or amusing. But in the larger context of the smart home, the stakes and the strategy become clear. Research from Consumer Intelligence Research Partners shows how Google Home and Echo are accelerating the adoption of smart home devices. In its most recent research release, the firm said:

The growth in smart home devices has promoted the connected accessory market. In home lighting, more than 70% of Amazon Echo and Google Home owners with smart lighting in their home, report purchasing the system after owning an Echo or Home device. Over 80% of smart thermostat users reported installing and setting up their connected accessories themselves. Over 70% of smart door lock and smoke detector systems report using Echo or Home to control the system.

For years, the “smart home” has been hyped and consumers have yawned. With the advent of Echo and its competitors, consumers are becoming more interested in controlling lights and thermostats with their voices.

In other words, voice-controlled smart speakers are becoming the front door to smart home adoption. And while companies making smart-home accessories can design them to be compatible with multiple systems, the winner of the smart speaker market will control the smart home market — literally and figuratively.

Apple, Microsoft and Samsung are all well behind Google and Amazon, but especially Amazon, which has perhaps a 75 percent market share of the smart speaker market today. Microsoft has been the historical proponent of smart-home gadgetry. Now, the company risks being marginalized unless it can create its own compelling new devices/software or convince more small appliance, electronics and other hardware companies to make Cortana (and not Alexa or Google Assistant) the virtual brain inside.

Amazon’s powerful sales channel and its crazy quilt of devices at a range of price points — an Echo for every budget — give it major advantages against competitors. It’s also innovating, iterating and responding quickly to competitor device features (like better sound and landline calling). Think of these many Echo and Alexa devices like Campbell’s Soup flavors dominating shelf space in the supermarket — capturing mind share and pushing others out of view.

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