Amazon is winning CES without even showing up
Amazon.com Inc. for a second straight year made its presence known at CES, but you won’t find CEO Jeff Bezos giving a keynote or his employees touting the company on the convention floor.
The e-commerce giant’s takeover of the world’s largest technology conference has been stealthy, with its digital personal assistant and mobile operating system, Alexa, increasingly appearing in other brands’ hardware. A slew of companies unveiled products based off the cloud-based software this year, a reflection of the company’s introduction last June of a developer’s kit for Alexa.
With the introduction of products such as Lenovo Group’s 0992, +2.30% Echo-look-a-like home-assistant speaker and LG Electronic’s 066570, -0.92% Alexa-powered smart fridge, Amazon’s AMZN, +0.73% intentions here are clear: spread Alexa to as many hardware partners as possible, so that more users may become entrenched in its ecosystem.
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This is a vastly different approach than the one long taken by Apple Inc. AAPL, +0.05% which forces iOS users to use Apple hardware, such as iPhones and iPads. That may have been a foolproof strategy during the heyday-years of the smartphone, when device sales were booming. But device sales are now slowing as hardware becomes commoditized, and that has made software, and the ability to use software across a wide spectrum of devices, a key weapon in Amazon’s arsenal.
At LG’s CES press conference in Las Vegas Wednesday morning, Amazon’s head of Echo and Alexa, Mike George, took the stage to announce Alexa integration with LG home appliances. Alexa, he said, has taken off since Amazon released the developer kit for its personal assistant last June. It is now integrated with more than 7,000 services and products, ranging from appliances and speakers to outlets and automobile infotainment systems, he said.
“What you might not know is we’ve been working together for a while now,” George said.
This isn’t the first time Alexa has attended CES. Last year, she slipped into the convention through partnerships with major companies like Ford Motor Co. F, +4.73% and Belkin. Ford announced Alexa integration with its SYNC in-car technology platform, enabling drivers to communicate with the Amazon platform and manage controls in their homes from their dashboards.
At CES 2017, Amazon has upped its game, and Alexa now seems to be everywhere. The new Lenovo speakers are particularly notable because they look nearly identical to Echo, Amazon’s home-assistant speaker. The Echo was one of the first of its kind on the market, inspiring a number of copycats, including those from rivals, such as Alphabet Inc. GOOGL, +0.10% which last year introduced Google Home.
The Lenovo Smart Assistant is a sleek piece of hardware, with a powerful microphone that can pick up voice commands from up to 16 feet and a speaker that on the premium “Kardon” edition is louder and clearer than Echo’s. The Kardon speaker will retail for $179.99 when it becomes available in May, the same price tag as Echo. The baseline Lenovo speaker is even cheaper, retailing at $129.99 and coming in three colors, providing more aesthetic options than Echo.
But the Lenovo speakers are merely pieces of hardware without the brainpower of Alexa, which connects users to third-party apps and the internet. Alexa enables those users to get the weather, order an Uber, play music from Amazon and Spotify, and, perhaps most importantly, buy products seamlessly from Amazon’s marketplace, just as they can with Amazon Echo. In other words, the Lenovo speakers are but another tool in which users can spend more money on the Amazon platform. That’s why, when asked whether Amazon is angry about the hardware competition, a Lenovo spokesperson said it’s quite the contrary. “They’re stoked about it,” he said.
LG’s smart fridge introduced this week uses Alexa in a similar fashion, with the added benefit of being able to estimate calories on your takeout dinner and order new eggs and milk on the spot when you run out.
The Alexa takeover of CES highlights a shifting tide in the technology world, one that increasingly values software over hardware. Hardware is no longer the flashy item at CES, it’s a tool in which to experience new software innovation. Cloud computing, artificial intelligence and machine learning are all opening up new experiences in the Internet of Things, mobility and augmented reality.
By allowing developers to come up with new ways to implement Alexa into services, and allowing original equipment manufacturers such as LG and Lenovo to develop their own hardware integrating Alexa, Amazon is positioning itself as a key software player in the Internet of Things, enabling people to pick and choose which hardware they’d like to use, while remaining entrenched in its ecosystem.
Shares of Amazon rose 0.5% to $757.15 in afternoon trade. They’ve risen 19% in the past year, compared with a 13% gain for the S&P 500 SPX, +0.62% Shares of Apple traded flat around $116.14 Wednesday, though they’re up more than 10% in the past 12 months. The Dow Jones Industrial Average DJIA, +0.32% has gained 16% in the last 12 months.