Yandex – Yet another speaker.

Alice finds a home. 

• At its annual developer conference names Yet Another Conference, Yandex unveiled a series of features and upgrades that are aimed at cementing its grip on the Russian internet market.
• Yandex’s algorithms have been exclusively trained using Russian data which will protect Yandex from foreign competition but are also likely to prevent it from gaining any real traction overseas.
• The main announcements included:
  • First, Yandex.Station: which is a smart speaker that serves as a home for Yandex’s smart assistant Alice.
  • Despite being yet another speaker, Yandex.Station is the only place where Alice will be the default option (Android is Google), making it a good option for the Russian market.
  • The device also has an HDMI-out socket meaning that it can also double as a casting device as well as a streaming set top box.
  • Yandex’s own KinoPoisk as well as ivi and Amediateka will all be supported from launch.
  • Second, Yandex.Dialogues: which is essentially a platform by which third parties can develop skills for Alice.
  • In addition to switching lights on and off, the platform allows service providers to have a more in-depth interaction with their customers.
  • For example, a take-away restaurant can enable its menu, interaction with a chatbot or a human all taking place using the speaker.
  • This includes services like groceries, clothes and mobile operators.
  • Third, Yandex.Plus: which is a similar, but cheaper service like Amazon Prime.
  • For $2.75 a month ($33 per year) users get access to Yandex Music, Ad-free movies and TV series on the web-based version of KiniPoisk, an extra 10GB storage on Yandex.Drive and free delivery to 30 Russian cities on transactions on Yandex.Market of over $8.
  • Market is a new market place like Alibaba’s Tmall which has just launched in beta.
• Apart from classified advertisements which is dominated by Naspers’ Avito.ru, some aspects of the internet market in Russia are reasonably open.
• There is no dominant e-commerce platform like Amazon which is I suspect why Yandex has decided to emulate Amazon’s offering rather than launching a Russian Facebook.
• Facebook is pretty widely used in Russia.
• Yandex’s announcements represent the obvious progression that it needed to make to hold into its position the Russian market taking services that have worked well overseas and adapting them for the local market.
• This is where I think that Yandex can create a significant barrier to entry.
• This is because the best AI today is still basically pattern recognition meaning that predictions that are made are only valid for as long as the historical data set upon which they were trained remains stable.
• Taking Western algorithms and running them in Russia should result simple predictions being correct, but the valuable, more insightful conclusion are likely to be missed.
• This is because the patterns that would allow these insights to be gained are not present in Western data.
• However, I think that the exact opposite is also true meaning that Yandex’s algorithms will also not work optimally outside of Russia.
• Hence, I think that Yandex, very like Baidu, has a great opportunity in its home market, but its prospects outside remain quite limited.
• With a population of around 150m, this is a market that a more complete ecosystem, like the one Yandex is creating, should be able to earn a good return especially if competition remains limited.
• RFM continues to rate Yandex’s AI in third place behind Baidu and Google but notes that all three are limited in their performance to the data sets upon which they have been trained.

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