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Amazon Echo: The World’s Smartest Assistant

Think Amazon (AMZN) is just the world’s largest online retailer? Think again.

As technology advances, so does Amazon’s reach in the sector – to the point where it now competes with some of the largest companies in the world in a variety of fields. For example…

  • In Amazon Web Services, it has a mammoth cloud-computing business that rivals the likes of Google (GOOGL), Microsoft (MSFT), and com (CRM).
  • It operates streaming video and audio businesses that compete with Netflix (NFLX), Hulu, and Apple’s (AAPL) iTunes.
  • It runs its own publishing company to feed Kindle readers more content.
  • And increasingly, Amazon is developing its own consumer products, rather than just selling other retailers’ goods. Like its latest product – the Echo.

Embracing the fast-growing world of robotics, Echo wants to manage your household and make your life easier. Here’s how…

Echo – the New-Age Personal Assistant

Echo is a “personal robot” that understands your voice and can control much of your household – if you let it.

The idea of personal robots, or home assistants, has existed for a while now, and several crowdfunding campaigns have attempted to make them a reality. But they haven’t caught on yet for two main reasons.

First, we’ve never seen a personal robot with the capabilities of Echo and that has the backing of a giant like Amazon. And second, few people have “smart,” controllable devices in their homes just yet.

But Amazon has raised the stakes by making Echo tap into the company’s other business lines – a development that allows it to do things that other personal robots can’t do.

So what does Echo do?

It Hears You: There’s an ongoing debate in the tech sector about whether voice or touch input will be the dominant means of instructing devices in the future. Smartphones have services like Siri and Google Now, but most of the apps are touch-driven, and texting has displaced a lot of communication that previously would’ve been by voice.

Echo takes things to a new level in the voice recognition area. While Apple’s Siri and other voice-commanded assistants require you to speak clearly and directly into the microphone, Echo’s innovative system is equipped with greatly enhanced hearing abilities. It’s designed to hear you from a distance and can detect your voice from across the room, even when the device is playing music. This is merely the entryway into the other things that Echo does, but it makes a strong case that voice will be the main way we communicate – at least with machines.

It Shops: Echo connects to Amazon and knows everything you’ve ever bought. And as the saying goes, “Knowledge is power.” So if you’re an Amazon Prime member, you can reorder anything simply by telling Echo. It’s this feature that allows Amazon to market Echo so aggressively – the company hopes Echo will boost its other sales across the board.

It’s Your Morning Planner: If you’re like most people in the morning, you want to know the news, sports, weather, and traffic information. Well, Echo is like a radio station where you’re the station manager. It can deliver all this information on demand. And instead of waiting for a commercial or a song to finish before you find out, you can simply ask Echo for a traffic report.

It’s Your Personal Assistant: If you find it tough to keep track of your daily to-do list, Echo works like an intelligent personal assistant. It interfaces with your Google Calendar, keeps shopping lists, and more. For example, you can recite a shopping list while standing in your kitchen and Echo will send the list to the associated smartphone app so you can read the list in the grocery store.

It Entertains You: For music lovers, Echo connects to your Amazon Prime music account and streaming music service, Pandora (P). It can also receive streams from your smartphone, so you can listen to any other service you’re subscribed to. And it uses Tunein and iHeartRadio to provide hundreds of radio stations from around the country.

If your tastes run more toward a literary bent, Echo will read to you if you like. It uses a high-quality speaker system to read audiobooks to you. Much like the shopping feature, this allows Amazon to sell more products through the device.

Echo Knows All: Like Siri or Google Now, Echo taps into the internet to give you answers to any burning questions you might have. Having a sports argument with friends in your den? Simply ask Echo and it will tell you who won the 1987 Super Bowl. (It was the New York Giants and Phil Simms was the MVP.)

It Controls Your House: I’ve written before about the Internet of Things (IoT) and the “universes” tech companies are creating that will allow consumers to control the growing number of smart devices in their homes. Echo can control three of those “universes” – Wink, WeMo, and Philips – and you can count on it adding more over time. So you can simply tell Echo from across the room to dim the lights in the den, make the master bedroom warmer, water the lawn, or even start a pot of coffee.

It’s the last part that makes Echo particularly interesting…

The Future Will Be Brought to You by Amazon

Adoption of smart devices in the home has been slow. Part of that is down to the expense. For example, a Cree 60-watt equivalent light bulb sells for under $5, while its “smart” cousin sells for nearly $15 and requires a hub that costs another $50 or so. Not very smart.

But in time – and as technology improves – prices will come down. And it’s the huge diversity of tasks that Echo can complete that makes it such a powerful product. Few people will want all the services, of course, but just about everyone would benefit from at least some of them.

The fact that Echo speaks several “languages” so it can communicate with various devices means it could be the innovation that jump-starts consumer adoption.

The other barrier to adoption of smart devices in the home is that most of them don’t really save any effort. After all, why would you track down your smartphone and open an app to turn off a light when the switch is right there?

But with Echo, you simply say what you want done and it’s done. Echo is always on, it’s always in the same place, and it keeps track of which devices are in which “universe.”

This level of simplicity is key to driving adoption of smart devices and everyone who makes IoT devices for the home should applaud Amazon for introducing this product. As a result, the consumer end of the IoT may be controlled by Amazon.

To living and investing in the future,

Greg Miller

Greg Miller

, Senior Analyst

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