Amazon entered the AI-powered assistant market years ago, but most observers agree the company's just getting warmed up.
Within the next few years, Amazon is expected to add more bots, IoT-connected gear and other devices -- all with Amazon Alexa and its descendants built in. These devices will allow for easy, remote operation and coordination over ever-widening swaths of our lives. They'll also be available for various settings -- homes, schools, offices and smart vehicles.
But Amazon can't build an entire IoT ecosystem by itself. As it expands its array of smart devices, Amazon will continue to grow the number of its partners, with ripples throughout multiple industries. Amazon has already started to disrupt some markets, and experts expect more of the same in the years to come.
Much of the market commotion caused by Amazon and competitors, including IBM's Watson, will be about doing things in new ways, said Adam Wright, an IDC senior research analyst. This includes smarter homes, medical diagnoses and changes to the hospitality industry.
For example, some Marriott International hotels allow guests to use an Echo speaker in their rooms to call the front desk, ask questions about the hotel's services, and access the hotel's streaming video and music content. Other companies are using Alexa for Business to track meeting room stats, control lights and thermostats, and manage calendars; these tasks by themselves are not disruptive, of course, but observers expect the business uses to grow over time.
Stalwarts in other industries will be negatively impacted by Amazon's entrance into their markets, particularly traditional leaders in physical security and lighting, Wright said. They'll have to change pricing structures and add products and services -- or risk losses to their revenue and market share.
Other organizations could lose brand recognition, such as auto vendors that use Alexa as the front end to communicate with customers.
Amazon smart devices will move from homes to businesses
Alexa wasn't the first AI-powered assistant on the market -- Apple's Siri beat it by almost three years and Google Now, currently called Assistant, by two -- but the current number of Alexa-connected devices and partners trounces everyone else's smart-related gear. Amazon has more than made up for lost time, Wright said.
Amazon saw how critical the ecosystem was to the growth of the smartphone market, so it emulated that model by creating a broad portfolio of services, development tools and devices for its AI assistant, Wright added. Each device is a critical touchpoint that generates insights into user behavior, which can then be used to deepen the relationship with consumers and expose them to new products through personalized recommendations.
For example, ownership of the Amazon Echo smart speaker leads customers to purchase other devices, including streaming services, set-top boxes and security monitoring. Amazon's bet is that these devices will make consumers increasingly comfortable managing their world through the use of AI and analytics, which will eventually lead to more smart devices in corporate settings and other uses.
Amazon wouldn't comment for this story, but analysts expect the enterprise market's adoption of these devices to occur more gradually due to security concerns, privacy regulations and businesses' reticence to quickly adopt breakthrough technologies.
From a connected home to an intelligent one
Consumer goods will increasingly be AI-enabled through IoT form factors, said Jessica Ekholm, research vice president at Gartner. Different user interfaces -- from gesture control to facial expressions -- will make interactions with the devices easier and more natural. For example, Ekholm expects to see radar-enabled gear that can detect when people stop breathing or when dogs start barking, to help caregivers and others take immediate action.
The real power will come when all of a home's smart devices are connected, in ways that are transparent and easy to use. The idea is to allow consumers to register their preferences for each individual device. For example, you might want your smart devices to control home security, thermostats and lights but not make financial investments or automatically order food for your fridge.
Once you create the boundaries and settings, the systems learn every time you touch, talk to or look at a device, and then send that data to Amazon and its partners. The vendors use that data to improve the interface and add product features, to make even more devices that consumers want. With each new device, that cycle repeats.
These autonomous smart devices will adapt to and anticipate people's needs by analyzing data from sensors in homes, devices, wearables and connected cars, according to a Gartner report. Key components will include an analytics engine, AI and a way to easily connect all devices. Some of these gaps will be filled by third-party AI-as-a-service platforms, such as Neura or Viva Labs.
Amazon smart devices in the corporate space
Amazon's smart devices won't be limited to the home. The company has already moved smart devices into the corporate space, with Alexa for Business. Customers have adopted this to allow employees and visitors to ask questions, start and stop video or audio meetings, and ask for statistics from the corporate business information platform.
Next up for Alexa in the corporate setting is to help with other basic tasks, such as composing emails, IDC's Wright said. He predicts that in the near future, users will be able to take their Alexa settings from home to the car and to the office.
Companies will support these integrations to promote employee satisfaction, and they will use security mechanisms, such as encryption, to ensure corporate systems can't be controlled by personal ones -- and vice versa, Wright said.
Corporate America has used virtual assistants in the help center for years, but IDC envisions the internal use cases going far beyond that, such as filling out expense reports and requesting time off.
Imagine a smart coffee maker in the break room that you can tell remotely, from your iOS or Android phone, to brew a pot of hazelnut-flavored decaf, then come in five minutes later to grab a cup of fresh joe. The coffee maker will also be able to order supplies from Amazon's Dash shopping site or through Amazon Fresh.
Other uses for Amazon smart devices include running industrial systems via AI-based IoT devices. IOT Analytics, a marketing research and consulting firm, expects this market to grow at a compound annual growth rate of 31%, from around $15 billion as of December 2019 to $72.5 billion by 2025.
Companies are also using AI and machine learning, with advanced analytics, to discover more about their customers' habits and preferences. But it is a fragmented market, dependent on vertical use cases, and corporations are taking things slow. PwC's annual survey found a significant drop in the number of companies engaging in enterprise-wide AI projects -- 4% in 2020, versus 20% in 2019.
Most executives believe in the promise of AI, but they're investing in foundational systems and processes before they get too far ahead of themselves and need to hire people with specific AI skills, which are in short supply.
Privacy regulations -- such as one in Europe specific to ethical AI implementations -- will also likely delay adoption. Remember, GDPR started in Europe but has to be adopted by any company with European customers.
Amazon sets foundation to expand AI-powered offerings
If all of this sounds a bit too futuristic, consider that Amazon already has the underlying technology for these AI-powered scenarios.
For example, Amazon's Smart Oven includes a microwave, convection oven, food warmer and air fryer. You can tell the oven, via Amazon Echo, to start or end cooking; it can scan certain packages to determine cooking times and other needs and will let you know when your food is ready. An optional Braille keypad overlay enables visually impaired people to use this device.
The AmazonBasics microwave goes a step further, as it can automatically reorder popcorn when you run low, via Amazon Dash. Slow cookers, toasters and other devices will inevitably join the lineup.
In addition to Amazon Alexa and Amazon Echo, the company has been laying the groundwork for further products through in-house development and acquisitions. This includes Yap, a speech recognition platform acquired in 2011, and Evi, a natural-language search engine Amazon bought in 2012.
In recent years, Amazon invested in natural language processing, machine learning and other related technologies. The results include Amazon SageMaker, the Lex natural speech processing system and Polly, a text-to-speech system -- all available on Amazon Web Services.
Corporate customers, including healthcare giant Cerner, the National Football League, NASA, Pinterest and Zillow, have used these services to build their own AI systems, from visual search, machine learning-powered stats and face recognition to their own private versions of Alexa. And these efforts essentially lock these organizations into continued use of Amazon's AI services; once organizations start to develop apps with proprietary algorithms, with AWS' or any others', there's no going back.
Amazon continues to make it easier for developers to connect their devices to Alexa, via the Alexa Connect Kit managed service. Alexa works with numerous routers and mesh systems to help everything work together in all corners of the home. Kits allow you to add Alexa to your connected car, and auto manufacturers have begun to build Alexa into their car entertainment systems. Also, the original Echo has been joined by numerous other devices -- the Echo Dot, Echo Look, Echo Spot, Echo Show, Echo Plus -- all with different features and functions.
Amazon already has its tentacles in almost every AI-related market. It's safe to assume the company, with $280.5 billion in net revenue, an increased emphasis on B2B services and 150 million Prime customers, will create even more granular devices for just about every imaginable niche.