Two weeks ago, Google announced their Google Home product which is similar to Amazon’s Echo product. While both look like a voice-controlled speakers, in my opinion they are much more. Both are the first products of a new segment that I would call “personal assistants”. What do I mean with this?
A personal assistant is a system that
- allows communication in natural language,
- has a deep knowledge about the world,
- knows your personal preferences,
- that can interact with physical objects (like a light switch, your stereo equipment or your washing machine)
In my opinion the last point is quite important. To call something an assistant, it really has to DO something. It is also not a butler, that just does what you tell him. When you go to bed an say “turn off the light”, a butler would just do this. An assistant will do more. Imagine the following dialogue:
You: “Turn off the light”
Assistant: “I see that you have an early appointment tomorrow. Should I wake you at 6 instead of the normal 6:45?”
You: “Yes, please”
Assistant: “Have a good night” (turns lights off)
The digital assistant should also know that it’s not a good idea to talk to you in the sleeping room, when your husband or wife went to bed early and is already sleeping.
Google Home is just an interface to the assistant service. It will be able not only to manage your appointments, play back music but I would expect that it will be also an interface to your home. If your digital assistant knows the time of your first meeting at work, it can not only plan the wakeup call, but also power on your coffee machine. It will know when you leave your house and automatically lock your door. It will do a lot that I can’t even think of today.
However, no single firm (even not Google or Amazon) will be able to deliver a complete solution for all possible use cases. I do not expect that you will ever install Google light switches in your house. But your Google personal assistant should be able to control your light. This means that this is a classic platform business.
As with all platform businesses there isn’t rooms for a large number of platforms in the same area. Usually you see one to four main players with a number of niche players around. But who will be the platform leader in personal assistants?
Amazon is in a good position. The Amazon echo is the only device that is already on the market. They also have the skills and infrastructure to build a service like this. They also know how to provide useful APIs to developers. With its cloud computing platform Amazon already powers a large number of consumer services – even if the consumer doesn’t know about it.
Apple have been highly successful building platforms. With the iPhone Apple created the first large platform since Microsoft Windows. However, Apple don’t like infrastructure business. Their platforms are build with one goal: to sell more Apple hardware. This has changed a bit with Apple Music, but I still don’t see Apple competing with Amazon, Google and Microsoft for the platform with the lowest price and the most features. While Apples HomeKit might be an interesting approach it is limited to Apple devices. Do you want to live in a smart home that can only be controlled with Apple devices?
While Facebook is working on AI, it is mostly targeted to optimise the user experience within Facebook. Also experiences with companies bought by Facebook shows that Facebook isn’t interested to build an open platform that programmers connect to if it is not highly integrated into the Facebook application.
Google is in a similar position as Amazon. They know how to operate large platforms and provide APIs to developers. They have access to the larges volumes of data available to train their system. However, one thing they consistently failed was to market hardware. The mobile phone business taken over from Motorola was sold again. The Chromebook is an interesting device, but did not get traction on the market. The best-known hardware from Google is the Nest thermostat – an acquisition. However, it seems that Google doesn’t really know what to do with Nest.
Google had to biggest success in hardware with the Android platform with a strategy that already worked for Microsoft: sell on Operating system and sell licenses to hardware vendors.
Maybe that is also a good strategy also for personal assistant platform.
Interestingly I did not see a lot in this area from Microsoft. I’m pretty sure that Microsoft is working on this, but I can’t see their strategy in this area yet. Their APIs and platforms are becoming more and more open, but Microsoft is still seen as the “Windows company” in the consumer market.
There are a lot of startups that work in this area. However, I think most of them are just working on a cool technology and want to be bought by one of the large players. I don’t expect that one of these
Samsung is a classic follower. I’m pretty sure we will see some kind of voice-controlled device from Samsung also in the next 12-24 months. However, Samsung has never been successful building a platform business and I don’t see that they are doing anything to change this.
Looking at the strengths and weaknesses of different players in this area, I would expect Google to be successful when they focus on building a platform and APIs instead of selling hardware. However, Amazon is an important competitor and it will be interesting to see how they and the other competitors will position themselves in this area.