The utter failure of the Fire Phone apparently hasn’t curtailed Amazon’s huge ambitions in hardware. The company today unveiled Amazon Echo, a slightly quixotic, 9-inch tall speaker that plays music, fields voice commands and Internet queries, responds in a pleasant conversational voice, and of course (since this is Amazon, after all) will obey instructions to put various products into your Amazon.com (AMZN) shopping cart.
This Amazon demo video of a family interacting with Echo tells you everything you need to know about the device. (Fair warning: It’ll also make your family seem pretty dysfunctional by comparison.) Like Google’s (GOOG) service Google Now, the device is persistently listening and can be activated by uttering the name “Alexa.”
Amazon has been developing Echo inside its Lab126 offices in Silicon Valley and Cambridge, Mass., for at least four years. The device, codenamed Doppler or Project D, was part of Amazon’s first attempt to expand its device portfolio beyond the original Kindle reader.
Amazon has acquired several speech companies over the years, including Evi in the United Kingdom, a text-to-speech company called Ivona, and voice recognition outfit Yap.
As with all Amazon devices, the goal is, in part, to make it easier to buy things. Another Amazon gadget, the Dash, allows Amazon Fresh members to scan bar codes and also speak voice commands to add items to their shopping lists. To field voice queries, the Dash uses the same backend cloud service as Echo.
Amazon appears to be moving cautiously with Echo. The device costs $199, but customers have to apply for one, and it will be sent out selectively for now. The company must first make sure Echo is efficiently answering queries and fulfilling its ambitious promise—that it can field and respond to queries from across the room. Amazon is also likely seeking to avoid the same situation it entered with the Fire Phone, when it was caught with a disastrous glut of excess inventory and had to take a $170 million writedown.
Michael Pachter, an analyst at Wedbush Securities, said he doesn’t understand why people might be tempted to purchase Echo. “I think it’s just a two-way speaker, but why isn’t there an app that lets me do the same thing without having to spend $99 on hardware?” he said. “I think this is a solution that is seeking a problem.”
More favorably, James McQuivey, an analyst at Forrester Research, released this note:
“Every major digital platform company from Google to Apple wants to put sensors in your home. Google has thermostats and cameras thanks to its acquisition of Nest and Dropcam, Apple has added HomeKit, a set of developer tools for building apps for the home. But Amazon is the first to put a persistent microphone interface in your home, a listening and learning service that is ready to hear your every command. Sure, it doubles as a connected speaker and some people will end up buying it for that, but the Echo will only achieve its real purpose when you start asking it questions, having it complete tasks for you — especially shopping tasks — just the way Apple hopes its users will interact with Apple Watch.”
He added, “The risk for Amazon is that [the Echo] may end up being too early, setting the table for a party that consumers aren’t ready to join. But there’s no better way to find that out than to try; Amazon’s limited rollout of Echo to its Prime users is exactly the right way to try.”
