Are we entering the era where sci-fi becomes reality? While still early, we are seeing strong progress in artificial intelligence, virtual reality, consumer space travel and self-driving cars. Not too long ago, these trends seemed better suited for the big screen rather than real life. Personally, I have been intrigued by popularity of the Amazon Echo and Google Home and the rise of the in-home virtual assistants. Technology to automate your home and virtual assistants like Siri aren’t new, so why is this trend breaking out now and what is the potential for the future? Here’s my take.
Key Voice Stats:
- 8M+ people own an Amazon Echo. The Echo was the best-selling product across Amazon last year. Impressive feat 2 years post-launch
- 20% of Google queries on Android devices are now made by voice
- Siri handles 1 billion requests per week through speech
It’s clear consumers are interested in voice. Here are a few reasons behind the rapid consumer adoption in the last couple of years.
Better Consumer Experience with Voice
As a fan of Ironman, I’ve always wanted to build my own Jarvis, Tony Stark’s virtual assistant. With Alexa, we have a simplified version of Jarvis in our home. [Quick side note: Alexa is the digital assistant and the Echo is the physical device that contains Alexa.] Alexa creates a better consumer experience when executing basic queries, such as looking up the weather or setting a timer, because it helps us accomplish our tasks much faster. In fact, we can speak 3x faster than we can type. Alexa also enables us to retrieve data in a more natural way, through conversation, instead of fumbling through a phone to type a search query.
Not only can Alexa understand you quickly, she can also answer your questions relatively accurately. Recent advances in machine learning has improved the accuracy of computers, which results in a positive consumer experience. Furthermore, this technology is continuing to improve over time. As we continue to speak to our devices, the increase of data flows will no doubt help Amazon and Google improve their voice technology.
Another phenomenon we’re seeing is the quick adoption of voice interfaces by children. As the song goes, “the children are our future” and same holds true with adopting technology. Curious kids love asking Alexa homework questions, knock-knock jokes, and games through Amazon Skills. It’s the easiest UI for them to use and most kids don’t have smartphones. We’re raising a generation of children who are comfortable using voice interfaces. In the future, a child may interact with technology through a voice interface before they use a phone. This could result in a big shift in consumer behavior. Think about how millennials impacted technology because they grew up with access to the Internet and smartphones. Children today are growing up accustomed to interacting with devices through voice. As these young children grow into influential technology consumers, I predict voice will become a key interface.
The Killer Platform and the New “App Ecosystem”
So what’s next for these devices? For Amazon and Google, it was never about winning the hardware battle, it’s about winning the war for the next operating system. Amazon cleverly opened their platform to developers to build apps or as Amazon calls them, “skills.” Developers already built over 7,000 skills on the Alexa platform, a 7x increase in skills in the last 7 months. That’s tremendous growth.
There are two ways for developers to build on the Alexa ecosystem. You can build skills or you can build custom hardware and use Alexa to control the hardware.
So what skills are developers building?
The nature of the device lends itself to consumer at the moment, but that is often the adoption curve before technology works itself into the enterprise. It’s interesting to note that the top skills at the moment are initially around content consumption:
It seems like we like to learn through Alexa and a bunch of us have trouble sleeping :). Top skill categories are:
- News (2,555 skills)
- Games, Trivia & Accessories (2,430 skills)
- Education & Reference (1,620 skills)
- Lifestyle (867 skills)
- Novelty & Humor (838 skills)
As we’re investors in b2b software, I noticed a few interesting b2b / productivity apps breaking into the skill store:
Right now, Amazon Echo and Google Home are contained within the home. As an enterprise investor, I am watching to see how Alexa and Google Assistant will make the jump from home to business. Current business skills tend to be extensions of their web app, much like how b2b web apps initially made the jump to mobile. The most successful consumer mobile apps leveraged features that were unique to the smartphone such as location and the camera. What will voice-first business skills look like and what is voice’s unique advantage to the enterprise? These are the opportunities I will continue to investigate. Perhaps I should ask Alexa!
