Amazon reported its quarterly earnings yesterday, and the company blew away expectations, but it also noted how big Alexa was in 2017. Amazon’s CEO, Jeff Bezos said on the conference call that Alexa blew away its expectations, which were already pretty optimistic for 2017. Bezos added “expect us to double down” as Amazon (and other companies) don’t see surprises like this that often. But what does that mean for smart home products? Let’s explore that theory.
Currently, Alexa has over 30,000 skills, which is a huge jump from this time last year when Alexa was just crossing 10,000 skills. So it’s obvious that the developer-base is there for Alexa. It also is able to control over 4,000 smart home devices. That shouldn’t be a surprise seeing as most smart home products opt to add Amazon Alexa support first, over Google Assistant or even Apple’s Homekit and Microsoft Cortana support. That also puts it ahead of Google, but only slightly. Now with Amazon planning to double down on Alexa, it’s going to mean more behind-the-scenes changes, than changes that consumers will see. Amazon will likely make it more attractive for developers to develop for Alexa by creating skills and such. But there is also the chance (a very likely chance) that Amazon will continue creating Alexa products, and even cheaper products with Alexa included. Right now, the cheapest Echo is the Echo Dot, which retails for $50, but routinely drops to around $30-$40. But there are third-parties making Alexa speakers, like the Eufy Genie, which is even cheaper at $35. So expect to see even more choices out there, so that Alexa can get into more devices.
Alexa can already do a ton of different things. For example, Alexa can find you something to watch on Amazon Fire TV, or it can order pizza using the Dominos or Pizza Hut skills, it can even get you a ride with the Uber skill. Of course, there are a ton of different skills available for podcasts, music and even audiobooks. And when it comes to smart home products, you are able to control them with Alexa, whether that is turning on/off your lights and smart plugs, or adjusting the temperature of your Nest Learning Thermostat, or even showing you the feed from your Arlo Pro 2 camera. But Alexa does have room to grow. One feature that could work really well with Alexa is having it learn your routines automatically. Now it already does routines for you. But if you typically turn off the lights around 8AM before you head off to work, or adjust the thermostat before you get home from work and such, Alexa could use machine learning to figure these things out and either do it for you, or ask if you want these things done for you.
Amazon did sell “tens of millions” of Alexa-compatible devices over the holidays, so the user-base for Alexa is pretty large (likely the largest amongst personal assistants right now). Now what Amazon needs to do is figure out a way to grow the Alexa base and figure out how to make revenue from it. There were rumors that Amazon may be bringing ads to Alexa, but that was later denied by Amazon. That could be a way for Amazon to make some cash on Alexa, but it would likely annoy users. Unless it put ads in between music or inside podcasts when streaming some audio on an Alexa device. Similar to what free music streaming services do. But the revenue on Alexa is really only generated by products with Alexa built-in, like the Echo lineup.
Seeing Amazon double-down on Alexa in 2018 isn’t really much of a surprise, but it will be good to see. Alexa is actually something that Amazon stumbled across a few years ago with the original Echo. It was originally just a personal assistant that lived inside a speaker. And since then it has blown up, and become a great competitor to the Google Assistant and Apple’s Siri. It’ll be interesting to see what Amazon does with it in the coming year and beyond.