Amazon’s Disruptions in the Smart Home Industry: One Alexa at a Time

The vision of the connected home is finally coming together. With technological advances in voice control and artificial intelligence, the automated assistant is now a viable control center for the connected home. Tech giants and startup disruptors have developed automated solutions delivered through both existing devices and new, stand-alone products. Most notable, however, is Amazon’s rapidly increasing dominance in the smart home market, evidenced by Alexa.

Alexa was both developed and introduced to the market by Amazon in 2014 with the launch of the company’s smart speaker, Echo. In June 2015, only a year later, an entire Alexa Fund was created to invest in companies making voice control technologies. The fund enabled developers to use the voice assistant’s advanced speech recognition and natural language processing technology to create their own conversational chatbots. The new code sourcing led to a major turning point in Alexa’s development and deployment as Amazon could now cycle through updated versions of Alexa faster than ever.

Now, in 2019, Amazon’s Alexa is one of the world’s most popular voice assistants—an AI-empowered program that lives on the cloud and communicates with users via speech commands and smart devices. Alexa turns five years old this year and if its growth is any indication of its lifespan, Alexa will live on for much longer.

According to a study conducted by the Cooperative Institutional Research Program (CIRP), Alexa has a commanding 70 percent market share in the U.S., with its rival Google Assistant comprising 24 percent. In addition, a Market Research Future study predicts the voice assistant market will compound at an annual growth rate of almost 40 percent, reaching $7.8 billion in the U.S. by 2023. The large disproportion with which Alexa dominates the U.S. market serves to illustrate its monopolistic operations and its rising control in the smart home industry.

Smart home technology – which connects devices to allow for the automation of lighting, heating, security and home appliances – is growing. In Business Insider’s smart home report, a survey gauging interest in the technology identified that 48 percent of respondents planned to use digital voice assistant devices to convert their home into smart homes. That opinion seems to be a popular one: the smart home market is predicted to grow into a $53 billion industry by 2022. Approximately 47.3 million U.S. adults currently have a smart speaker. What once seemed futuristic and “Big-Brother”-esque is now the norm for many homeowners.

In recent years, Amazon has itself made a series of investments, acquisitions and R&D moves in the smart home industry. No investment has seemed particularly consequential on its own, but with a recent deal in the smart apartment platform SmartRent, Amazon appears to have located a base through which it can integrate its technology into the houses it owns and operates.

Through its deals, Amazon has taken a pioneering lead in what has come to be called the age of “surveillance capitalism”— the commodification of reality and its transformation into behavioral data for analysis and sales. This new era includes some of the largest businesses of the future, such as 5G network technology, autonomous vehicles and smart cities. With its edge in this new economy, Amazon is poised for explosive revenue.

“Amazon has entered the surveillance capitalism domain with a very big bang,” articulates Shoshana Zuboff, author of The Age of Surveillance Capitalism. “Once you have [its recent developments] as your lens, and you look at Amazon, you will never look back.” Echoing Zuboff, Amy Webb, founder of the Future Today Institute, reiterates that “other tech giants aren’t even in the same universe as Amazon. We’re talking about an entirely new ecosystem that is literally being born in front of our eyes.” For these experts, it is clear: Amazon is charting a new course in the economy.

For instance, Amazon Echo started out as a simple smart speaker. Now, it is the center of the digital, connected smart home for millions. A McKinsey & Company study on connected homes in the U.S. revealed that smart devices have the capacity to disrupt every nook and

cranny inside houses, from home intelligence to daily wellness. Well-positioned in the market, Amazon is doubling down on its investment into the automated home, as evidenced by their product launch on September 20th. They announced 15 new Alexa-enabled products to make life easier for users, including a microwave, clock, amplifier and car gadgets.

Some of the services Amazon hopes to launch in the coming year include Echo Auto, Alexa Guard and Alexa Hunches, but the company’s goals encompass connecting every aspect of the home into one cohesive unit. Echo Auto will be able to understand location-based routines, such as pulling up to your home and alerting Alexa to turn on your lights. Alexa Guard will sync an Echo, smart lights and security service together, and Alexa Hunches will make suggestions, like turning off the lights at night, based on daily behavior. The ease with which Amazon plans on integrating its smart device with our lives seems effortless – making it the ultimate investment.

In fact, Goldman Sachs analyst Heath Terry feels that Amazon will deliver better-than-expected financial results when it comes out with its third-quarter results. As consumers increasingly look to Amazon for autonomous solutions to everyday problems, Alexa will become ubiquitous in their lives. For investors, the signs are ever noticeable. The smart home industry is rapidly expanding, and Amazon is the main firm driving its growth.

Through Alexa’s rising popularity, Amazon now has a strong say in the development of commonly-used smart home standards, giving the company more power as it continues to push smart speakers, cameras, doorbells and all other kinds of gadgets into its customers’ homes. One of the five most valuable stocks in the U.S. by market cap, Amazon’s recent focus on the connected home has set the precedent for other technology players to follow. Its competitors only comprise a fraction of the market share in the smart home space, demonstrating Amazon’s fierce capacity to engage consumers. Ultimately, however, the question still remains: will consumers continue to accept Amazon’s deep entrenchment into their lives – or will they finally break free from the mold?