Amazon.com, Inc. (AMZN - Analyst Report) can no longer be defined only as a retail giant. The company has rapidly diversified its offerings by entering into markets with significant growth potential. Its cloud business, which it calls Amazon Web Services, has been a key growth driver in recent times.
Always aiming for innovation, Amazon is now a frontrunner in the growing personal assistant market. Creation of products meant to control home devices like home security, lighting and sprinklers, to name a few, is constantly adding Amazon products to the homes of its consumers.
Let’s see what Amazon has been doing to maintain its supremacy in the personal digital assistant device space.
How Amazon Found a Place in Customers’ Home
Amazon’s foray into homes was through Echo devices, released in Nov 2014. It is a little speaker-like home automation device that can do everything from streaming music to dimming lights or cranking up the heat on the compatible thermostat through voice commands. It is capable of interacting with smart home products, such as the Philips Hue smart light bulbs and smart thermostats from Alphabet-owned Nest.
Initially, Echo had limited features. But it is now a necessity for a smart home.
Since its launch, Amazon has allowed developers to integrate Echo's voice assistant Alexa with many devices and services.
Amazon Leading the Race with Upgrades and Releases
Amazon has been constantly rolling out new features to its Echo devices. So the growing list of things its devices can do has been putting Echo in the headlines. The list includes a formidable lineup of compatible smarthome devices that Echo can control.
Just last month, Amazon released the second generation of its Echo Dot device. The new version of Echo Dot utilizes the same Alexa program that the earlier Echo device uses but is sold at a significantly lower price to reach to a broader range of customers.
Trying to make the most out of the upcoming holiday season, Amazon also released its second generation Fire TV Stick with an Alexa remote. Amazon’s Alexa Voice Service allows users to interact with the device by speaking to it. A user can open applications, make queries in the same way that questions are asked on Google Now, and control other Fire TV functions easily.
It looks like the company won’t stop until it has full control of everyone’s home.
Per the recent report from Gartner, consumer spending on virtual personal assistant-enabled wireless speakers would reach $2.1 billion worldwide in 2020, up from $360 million in 2015.
Also, the research firm said that by the year 2020, 3.3% of global households are expected to adopt a VPA-enabled wireless speaker. Werner Goertz, an analyst at Gartner said, “The widespread adoption and proliferation of VPA speakers could result in a significant number of online shopping orders in the home being initiated from a VPA speaker, rather than a laptop or mobile device.”
The stupendous growth projection for the personal assistant market is a key growth catalyst for Amazon. As Amazon’s Echo devices allow users to purchase products with voice command, it is expected to further boost Amazon shares in the years to come.
Alexa Gathering Steam
Although official numbers have not yet been released, a report by the Consumer Intelligence Research Partners from April indicates that Amazon has sold nearly 3 million Echo units since its introduction. Nearly half of Amazon customers were aware of the product by Dec 2015, up from a meager 20% in March of that same year.
As the personal assistant market is projected to have a booming future, Amazon’s Echo devices could very well be announced as its next blockbuster product. These new products from Amazon have the potential to increase sales and garner higher revenues.
Importantly, the personal assistant space is still in its nascent stage. Therefore companies like Google (GOOGL - Analyst Report) , Apple (AAPL - Analyst Report) and Amazon, among others are strong contenders in the new war of capturing consumers’ homes.
To heat up the competition, Google, on Oct 4, is expected to release Google Home, a smart speaker with a virtual personal assistant, in a direct response to Amazon Echo. Google’s new home product is expected to cost $129, $50 less than Echo. Although both products are pretty similar, it will be interesting to see which way consumers lean and how sales affect both companies going forward.
Amazon has grown revenues at an impressive rate for many years now. However, the company hasn’t always had the best success with its branded electronics line. Yet demand for its home devices should only be rising as Amazon is one of the few companies offering something that is both affordable and full of features.
Currently, Amazon carries a Zacks Rank #3 (Hold). A stock worth considering in the industry is LinkedIn Corporation (LNKD - Analyst Report) .
Notably, LinkedIn gained 0.43% in its last day’s stock price. On average, the company delivered a positive earnings surprise of 115.2% in the trailing four quarters. Moreover, LinkedIn sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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