AMZN Stock Enjoys the Lead with Amazon Echo
Amazon.com, Inc. (NASDAQ:AMZN) stock has been moving upwards gradually since the start of the year but Amazon chief Jeff Bezos couldn’t care less. He is more interested in expanding the empire of Amazon.com, Inc. and disrupting a few industries in the process. After conquering the online retail industry, Amazon is on its way to make a splash in the smart home market as well, which means more growth for Amazon stock. “Google Assistant” is also in the news on account of its arrival on a large number of “Android” smartphones.
Multiple sources have confirmed that Amazon plans to unveil one or more new “Alexa” devices this year that will let people initiate phone calls by voice. They will also be able to talk with others on the opposite end of another Alexa device through a feature that could serve as an intercom system. (Source: “Amazon plans to release new Alexa devices that can make phone calls and work as intercoms,” Recode, March 3, 2017.)
The sources say that an announcement can be expected in the coming months as the new hardware was in beta testing as of last month.
“Amazon Echo” and “Echo Dot” speakers have been surprise hits in a market hankering for voice-activated devices. And Amazon has been making the most of this opportunity. As reported by the company in its quarterly report last month, devices enabled by Amazon Alexa were the best-selling products during the holiday season. The customers purchased and gifted a record number of Amazon Echo devices, and pushing the sales up by over nine times compared to the last holiday season. (Source: “Q4 2016 Financial Results,” Amazon.com, Inc., February 2, 2017.)
Moreover, a number of developers are using the “Alexa Voice Service” to integrate Alexa into their products. Given the fast adoption of Alexa, it is most likely that Amazon stock stands to gain from further investments in the platform.
Amazon is also taking care of the security issues and is investing in developing a voice ID technology. The online retailer is apparently planning to introduce advanced voice recognition for Alexa. Such features are likely to keep customers firmly in the Amazon ecosystem and bode well for AMZN stock.
Amazon stock closed at $846.02 Tuesday and is up almost 13% in the year to date as compared to the gains of six percent posted by the S&P 500 Index.
Chart courtesy of StockCharts.com
It is obvious that the company wants to make Alexa a central part of a customer’s daily life. Apart from getting weather updates, ordering food, and buying things online, Alexa is still to gain more inroads into the lives of its users.
And one of the most promising areas for enhanced usage of voice assistants is to enable them to work like phones. As The Wall Street Journal reported last month, Amazon and Google parent Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) are reportedly working on adding voice-calling features to Echo and “Google Home.” (Source: “Amazon and Google Consider Turning Smart Speakers Into Home Phones,” The Wall Street Journal, February 15, 2017.)
The enhanced use of the popular home speakers as home phones is likely to boost the popularity of the smart speakers further and lead to a higher adoption of the Alexa platform.
According to The Wall Street Journal’s sources, Amazon’s Echo, powered by Alexa, or Google Home, powered by Google Assistant, could be used to make or receive calls. This functionality would mean that the companies would get further control over their customers’ lives.
Amazon has also just announced that its Echo speakers and other Alexa-powered devices will now work with “Office 365” calendars. With this move, Amazon takes another step in making Alexa more capable in helping people with their work instead of just being a medium of entertainment. (Source: “Amazon Alexa now supports Office 365 Calendar,” TechCrunch, March 6, 2017.)
If Amazon is able to increase Alexa’s presence in work-related applications, it could lead to increased adoption and more upside for Amazon stock.
Let us take a look at how Amazon Alexa compares with Google Assistant and what this means for AMZN stock going ahead.
Amazon Alexa vs Google Assistant
Google Assistant comes inbuilt with “Google Search” and it is here that the search giant may have a lead against Amazon. Google Assistant may have a better understanding of users’ daily schedules. Google Home speakers also have the advantage of being connected to “Chromecast” devices like TVs.
This means that people who already are heavy users of different apps by Google may prefer Google Assistant to Amazon Alexa for managing their daily schedules. However, Amazon is intertwined with customers’ lives in more ways than one and is the top destination for making online purchases.
Amazon had introduced Amazon Echo way back in November 2014 without much fanfare, and customers compared its voice assistant Alexa to the other services available at that time—”Siri,” by Apple Inc. (NASDAQ:AAPL) and “Google Now,” by then-Google, Alphabet Inc.
And since then, Alexa-powered devices have been extensively used by customers to make online purchases as well as undertaking numerous other tasks. The number of Alexa skills released has now reached more than 10,000. The growth prospects of Alexa has made things more exciting for Amazon stock.
So, people deeply engrossed in the Amazon ecosystem are likely to stick to the Amazon Echo, which has been the first voice-activated device on the market, rather than Google Home. Although Google Assistant could turn out to be smarter, Amazon Alexa has better chances because it has been faster in the market.
Amazon’s Alexa Aggression Is Good for AMZN Stock
Amazon appears to be the most aggressive player right now in the home automation market. The battle for voice-assisted digital devices empowered with artificial intelligence is heating up and the company is holding on strong to its first-mover advantage.
The future is moving towards being in a home where we can turn off the lights, order a cab, and get weather updates by just using our voice. And the world of voice-first devices is expected to be a pretty large and growing market.
There are millions of users who are tied to the Google ecosystem as well, so the battle would become more competitive and interesting in the coming months. It would not be easy to predict the winner, as both Amazon and Google come with their specialized set of skills. But as of now, it appears Amazon Echo is the winner in the Amazon Alexa vs Google Assistant face-off.
Combine this with the fact that Amazon.com has a strong presence in the e-commerce business together with a very successful “Amazon Prime” program and a fast growing cloud business, and it becomes clear that AMZN stock has a long way that goes upwards.