The annual Digital News Project report explains that the impact will be felt not just in media consumption, which Reuters says is booming as a result of devices such as Amazon’s Echo/Dot, but also in terms of retail, manufacturing, logistics, fulfilment, and communication services. For all of these reasons, AI-enabled smart speakers are best seen as an important new gateway into the home.
Who’s shouting loudest?
But first, let’s talk about voice. Fifty-eight per cent of the digital leaders interviewed by Reuters said that they are putting audio for intelligent assistants, such as Google Home and Apple’s HomePod, onto their strategy roadmaps for 2018. Bede McCarthy, Director of Product at the Financial Times, shared the key point of these findings:
Many of us continue to underestimate the acceleration of voice use in the home and on mobile. Some of these devices will have screens, but it marks a clear departure from dense text as a way to convey information.
But is voice really an efficient platform for doing this? It may be the most natural and intuitive way for human beings to ask questions, but it remains a passive, serial, and time-consuming method of receiving information in return (as anyone calling a contact centre knows).
The report recognises this challenge:
Speech input is three times faster than typing on a mobile device, but speech output is far less efficient than reading from a screen. Asking ‘What’s on TV?’ is quick, but waiting for a synthesised voice to run through all the options is an ordeal. This is why more smart speakers will come with some kind of visual display in 2018.
This will also open up new functionality, such as video calling or monitoring smart home cameras – as well as offering opportunities for less intrusive notifications.
With smart speakers and related devices spreading into 55 per cent of households over the next five years, according to Juniper Research statistics, the hardware market alone could be worth $10.6 billion, with Sonos, Samsung, Apple, Microsoft, and even Facebook all competing with Amazon and Google in the space.
These systems are taking off in the home first because there is less social stigma than in other locations, and because voice is proving a quick and convenient way of managing a range of tasks.
The implication is that the home environment – which is the office, too, for many flexible/gig-economy workers – is merely the first staging post in the journey away from 1990s-style GUIs. Next up will be our pockets, and our cars and smart transport systems, perhaps followed by retail and commercial premises. The report says:
Voice-capable AI assistants are also expanding across other devices, notably in cars and on smartphones and PCs, where ultimately assistants like Alexa, Siri, Google Assistant, Viv, and Microsoft’s Cortana, will lead to the greatest level of usage.
The Asian market is booming too. There, Alibaba, Xiaomi, Kakao, LG, and Naver are among the countless providers getting their foot in the door, says Reuters, either with their own intelligent assistants, or with services targeted at them. Over time, many of these vendors will become bigger players in the West, using low-cost electronics as a bridgehead into our homes, cars, and offices.
This is significant for a number of reasons. One is that over the next five years, China will become a billion-person testbed for the impact of AI, mobile commerce, and social networking, when it launches a compulsory, Uber-style social ratings system for citizens – a concept similar to that explored in the Black Mirror episode ‘Nosedive’.
The nationwide programme will monitor every aspect of people’s lives – from tax, credit arrangements, and bill payments to social chitchat, search, shopping, dating, and transport usage – and seeks to punish antisocial behaviour by withdrawing services and even restricting travel for citizens with poor ratings.
This has the potential to cast the humble home hub in a more Orwellian light: a spy in every home, the friendly informer that ensures conformity; the ultimate big data gatherer. In China, that’s the stated purpose of the ratings scheme.
In the West, the situation is rather different, but not without its own challenges for anyone looking to compete across a range of business activities. This is because one company holds sway over the transformed market more than any other. And it isn’t Google, as the report explains:
On Android smartphones, Google say more than 20 per cent of searches are now via voice. Assuming that this trend continues, Google’s core business is in serious danger of being disrupted. As the Strachtery blog has pointed out, Google doesn’t really have a business model for voice, whereas Amazon already has most of the pieces in place.
Amazon, which already accounts for around 70 per cent of the [smart assistant hardware] market, has the widest range of devices, the most skills/apps (15,000+), and the greatest number of integrations with other manufacturers through its Alexa speech recognition engine.
While other players were focusing on the smartphone, Amazon has been building a powerful position as the lynchpin of the connected home. Amazon sold tens of millions of Echo devices over Christmas while, for example, Apple’s HomePod launch was delayed until early 2018.
But that’s merely the obvious part of the story. The implications of what Amazon has been building behind the scenes over the past few years are truly extraordinary.
The many arms of its business have long appeared to fall into two discrete areas: commerce, including retail, logistics, and distribution; and Web services. But this is no longer the case, and the humble home hub represents the point at which the entire Amazon machine becomes focused on the consumer.
The report explains this in the baldest terms:
Alexa links seamlessly to the biggest retail store and delivery network that has ever existed. A simple series of commands will enable products to be ordered, paid for, and delivered in a frictionless and convenient way – furthering Amazon’s objective of being the logistics provider for everyone and everything.
It can afford to give away its devices and its technology, undercutting its rivals, because the money is made elsewhere. Once consumer habits are set – and commands learned – Amazon’s position will be hard to shift.
Amazon’s progress over the past few years can best be described as a lion slipping into the room disguised as a housecat. Behind every home hub is a vast, automated retail, fulfilment, logistics, and distribution machine, that also supplies content, Web services, and more, to a huge number of organisations.
That throws down the gauntlet to any organisation operating across any of those fields, either vertically or horizontally. But it also raises questions about transparency and trust. Whose products is Alexa ordering and why? And how – and why – are they more visible to Amazon than others?
A simple question to ask. But can Alexa answer it?