Amazon Echo – No Eureka.

RFM AvatarSmall

 

 

 

 

 

Amazon Echo does nothing to address the big issues.

  • As long as Echo is a great Bluetooth speaker it is unlikely to be nearly as big a disaster as the Fire phone.
  • Amazon has initiated its latest experiment with the consumer with the launch of the Amazon Echo which is basically a Bluetooth speaker with a brain.
  • This is a large (9.3” x 3.3”) cylindrical Bluetooth enabled speaker that has a digital personal assistant built in.
  • The voice controlled device can be used to answer questions, set alarms, check the news and play music.
  • The device is priced at $199 which puts it in line with other Bluetooth speakers such as the UE Boom, Jawbone Jambox and Bose Soundlink Mini.
  • However, all three of these companies have invested large amounts of money to work out how to make small units make a large amount of high quality sound.
  • The Echo is far larger than any of them meaning that it will have to deliver better sound at a higher volume to get reviewers excited.
  • Furthermore, the device has no battery as it is designed for in-home use which is likely to count against it when the reviews come in.
  • The idea here is to give consumers easy access to various aspects of their digital lives (media consumption, search and reference) via Amazon web services.
  • Like Google, the Echo does all of its thinking in the cloud making it almost infinitely upgradeable in terms of functionality over time.
  • However this is where the problems will start to occur.
  • The personal assistant functionality of Echo will only be as good as the systems that sit behind it and here Google is far better than anyone else’s.
  • Recent tests of Google, Siri and Cortana showed that Google was far better at interpreting the questions and coming up with useful answers than either Siri or Cortana.
  • I suspect that Echo will lag both Siri and Cortana as this kind of artificial intelligence takes a lot of money and a long time to develop.
  • Consequently, I think that the Amazon Echo will live or die by how well it fares when compared to other Bluetooth speakers in its price range.
  • The fact that it has no battery will count against it but if it has top notch quality sound, it might just see some volume.
  • Finally, it is totally unclear how this product links in with the rest of Amazon’s ecosystem and how it will make spending time with Amazon more fun and engaging.
  • I continue to think that Amazon continues to put the cart before the horse when it comes to its ecosystem strategy.
  • The ecosystem has to be fun and easy to use before one starts making hardware to run on it.
  • Furthermore, the hardware pieces must all work together seamlessly and add depth and functionality to the Digital Life offering.
  • Amazon’s hardware does none of this.
  • It looks like a random series of experiments where no real thought has gone into what the products are actually trying to achieve.
  • Until Amazon gets behind a cohesive and all-encompassing ecosystem strategy, hardware will continue to hamper an already incredibly fragile bottom line. 

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.