Amazon Stock, the Ultimate IoT Bet?
While this week’s tech and business headlines have focused on “iPhone 7” sales, another important piece of consumer data slipped below the radar: sales of Amazon.com, Inc.’s (NASDAQ:AMZN) “Echo Dot.” Analysts are now thinking that Amazon stock is the leading play on the Internet of Things (IoT).
The entire “Echo” series is powered by “Alexa,” a voice-recognition system which uses artificial intelligence (AI). You can ask it questions, get it to order you pizza, or switch off your lights. Amazon is setting up Echo devices as a gateway into the home, which is what IoT is all about; connecting the home.
The original Echo was a full voice-controlled speaker that ran customers about $179.99. It sold extremely well, prompting the company to release the “Echo Tap” and Echo Dot as companion products. The former is a portable version with a price tag of $129.99; the latter a bite-size device intended as a controller.
All three products out-performed expectations. As a result, Amazon is releasing the second generation of Echo Dot at a lower price. They want to expand the number of people who can afford it, hence the $49.99 price tag. The first generation sold for nearly double that amount.
Go to Amazon.com and you’ll likely see the Echo Dot advertised on the top banner. It is clear that the company wants to ramp up sales, especially since industry experts predict that voice is the next big platform. They want to leverage this momentum into an insurmountable early-mover advantage:
If Amazon stock is successful, it would a coup similar to the rise of the smartphone market. As some industry watchers may recall, personal computer (PC) chip makers like Intel Corporation (NASDAQ:INTC) were slow to react to the rise of the mobile platform. Their hesitation left the door open for smaller companies to carve out their fortunes.
Amazon believes that the future of IoT, and of consumer electronics in general, lies in voice-controlled artificial intelligence. They believe that consumers will respond to a digital assistant that they can speak to rather than type at. So far, sales of Echo Dot are validating their prediction.
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