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Summary

Google Assistant's payment enhancements and Nest's expansion into Germany, Austria, Italy, and Spain represent a new push from Alphabet in the area of smart living. However, Alphabet has gone from early leader in the smart home to playing catch-up to the likes of Amazon and Apple. These new initiatives are a direct response to this fierce competition, but Alphabet will need to work harder if it is to catch up.

Google will add payment capabilities to Google Assistant

Google has announced the development of a new functionality that will introduce payment support for online shopping transactions, making its AI assistant more useful as a tool for smart commerce at home. At this stage, the announcement is only directed at the developer community because the payment feature is still under development. Using the developer community as a channel for marketing and communications has been effective for Google in the past, and now the company is using it again to generate greater interest in its AI assistant.

However, Ovum believes Google Assistant needs to quickly catch up in terms of functionality and integration into third-party solutions if it is to compete head to head with Apple's Siri or Amazon's Alexa. For example, Alexa voice shopping functionality has been available since 2016 and Amazon's partner ecosystem is larger than Google's, offering integration with a wider range of vendors in the smart home space. The smart home offers numerous business opportunities for the commerce wheel to start spinning, and Google cannot be out of the game if it wants to make progress in this particular market segment.

Nest expands to Germany, Austria, Italy, and Spain

Nest's international rollouts have slowed significantly over the past few years: Its last international expansion took place in 2014 when the company launched in Belgium, France, Ireland, and the Netherlands. At present, Nest claims its solutions are installed in more than 190 countries. However, the official support is only available in 11 countries, mainly in North America and Europe, and the vast majority of partners capable of providing support services are still based in the US. Nest will need more energy, insurance, telecom/security, and home services partners as well as Nest Pro installers if it wants to make greater inroads into the European market.

The particularities of the localization process in each country should not be blamed for the slowdown of Nest's international expansion strategy. Nest first has to learn the lessons from the temporary recall of Nest Protect in April 2014 due to a product flaw, and how a situation like this can damage the reputation of a company. The company's internal turbulence caused by its managerial approach has meant that it has also been slow to launch new products. Ovum believes these events have been responsible for shaping Nest's market strategy, making the company lose some of its early impetus and become more cautious in terms of its global expansion.

Appendix

Further reading

Smart Home Case Study: Google, TE0003-000960 (December 2016)

Smart Home: Apple outsources smart-home strategy to HomeKit partners for now, TE0004-001098(October 2016)

Smart Home Case Study: Amazon, TE0003-000936 (September 2016)

Author

Mariana Zamoszczyk, Senior Analyst, Consumer Services

mariana.zamoszczyk@ovum.com

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