On September 14, 2016, Amazon held a press event in London to announce the launch of Amazon Echo and Echo Dot in the UK and Germany. This announcement paves the way for Amazon in Europe as the key enabler of artificial intelligence (AI) at home, not only in terms of geographical reach, but also in terms of market impact.
In 2014, Amazon broke new ground with the introduction of Amazon Echo, a voice-activated speaker/home automation hub that performs multiple tasks, and Alexa, its always-listening AI assistant. After testing the waters in the US, Amazon decided it was time to start exploring new opportunities elsewhere.
Amazon chose the UK and Germany as the first non-US markets to break into with Echo for two simple reasons: Amazon’s strong presence though its lucrative e-commerce platform and services and the availability of dedicated local development teams. Such resources played a key role in the localization of Alexa. Besides making Alexa sound more British (an obvious step to achieve success in the UK), Amazon enabled her to speak German as well. The potential for Alexa to speak not only new languages, but also new dialects, will be key to further Amazon’s geographical expansion.
The multilingual capabilities of Alexa are the result of advancements Amazon has made in the field of natural speech recognition. These improvements allowed Alexa to gain fluency and sound more like a real human rather than a robot. On top of this, Amazon developed new contextual reasoning capabilities which allow the AI assistant to understand the peculiarities of the British and German languages. This means that Amazon has recognized that to keep customers engaged, Alexa’s idiomatic expressions must suit British and German audiences. The next step for Amazon should be making Alexa a truly conversational virtual assistant without forcing the user to learn a specific “language” to request a command. This not only will enable more natural human–computer interaction, but will also represent an important step towards the use of AI at home and the enhancement of the overall end-user experience.
For its market approach around the smart home, Amazon has added some local flavour to its list of partners, including solutions such as Hive from British Gas and Deutsche Telekom’s Qivicon platform. These types of partner differ from the ones Amazon has in the US. In their respective industries, these companies are traditional service providers (SPs) that have decided to integrate Alexa into their own smart home platforms to allow customers to use voice commands to control various smart solutions at home. Amazon’s market strategy of allying with SPs and not just smart home vendors marks a new approach for the company. It also reflects how the adoption of smart home solutions is taking place in Europe. In Ovum’s view, the fact that Amazon decided to abandon its US-centric market approach and start exploring opportunities in other developed markets means that the company has been able to build a business roadmap that understands all the different commercial entry points to the smart home.
Amazon has also introduced an improved and cheaper version of Echo Dot. This device has allowed Amazon to extend Echo’s reach and transform Alexa into a truly ubiquitous AI assistant. The key was to enable connectivity with other Bluetooth speakers, creating additional voice control points for smart home devices as more family members become interlocutors. The interesting commercial approach to sell Echo Dot in multipacks shows Amazon’s commitment to making Alexa omnipresent by reaching every corner of our homes. It will only be a matter of time before we see Amazon Tap in Europe, making Alexa even more accessible to audiences that like being on the move.
Smart Home Case Study: Amazon, TE0003-000936 (September 2016)
Mariana Zamoszczyk, Senior Analyst, Consumer Services
Europe, Middle East & Africa team - +44 (0) 207 017 7700
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US team - +1 646 957 8878
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