Amazon is Going to Run Your Home
Amazon’s Echo has become consumers favorite in-home smart device. Users can perform a wide variety of actions from ordering new products to calling an Uber by simply talking to Alexa. The publicly stated end goal is for consumers to be able to order anything from Amazon using Alexa, but I theorize that it goes much deeper than that. My theory is that Amazon will eventually allow users to run their entire life through Alexa allowing Amazon to become consumers’ primary resource for shopping and gain insights into customers purchasing habits like never before. Think- enterprise resource planning system but for homes.
In the way that ERP systems increase efficiency and communication within a business, Amazon’s Alexa will be able to increase efficiency and communication within households by harnessing the capabilities of the internet of things. Alexa will ultimately allow people to control their utilities, transportation, in-home inventories, finances and more.
Utilities:
As our homes are equipped with an increasing amount of smart devices controlling our utilities like smart thermostats and light bulbs Alexa will work with these smart devices to maximize efficiency and provide users with strategies on how to save money and resources by integrating all of these devices with one another. Alexa already works with Nest’s smart devices allowing you to control the temperature in different rooms of your home, but the real benefits of Alexa will be realized when Nest’s thermostat, Hue light bulbs, and other smart devices measuring water/electricity/natural gas usage are all working together. Imagine one platform that can be used to control all of these in-home devices from your voice or smart phone, and then use data recorded from that usage to lower your monthly bills and display how much you are spending via a personal finance app like Mint. Not only will this allow current users to visually understand how these smart devices are making their homes more efficient, but it will encourage consumers to buy things like Nest’s thermostat now that they can actually visually perceive the benefits.
Transportation:
Alexa users can already call an Uber from the device, but the system could allow users to use and maintain their personal vehicles as well. Imagine asking Alexa to summon your Tesla or to check the maintenance on your vehicle. Eventually, Alexa will simplify the way we interact with our vehicles and simplify the inconvenient tasks of getting our vehicles inspected and renewing the registration.
In-home Inventories:
RFID chips are becoming cheaper and are being found on an increasing number of products. Once we have RFID chips in all consumer goods- devices like smart refrigerators, cabinets, and shelves will allow Alexa to track and ultimately predict the usage and reordering needs of basic necessities like food and home goods. If you’re running low on eggs and toilet paper Alexa will be able to predict when you’re going to run out and have those items ordered on Amazon so that they can be delivered without you having to lift a finger. This will change how we shop for groceries and save people the time and hassle of going to the store.
Finances:
When we are running our entire personal lives through Alexa it will provide us with more accurate spending habits and will create a more realistic monthly budget. Say you use a personal finance app like Mint which tracks your spending, creates a monthly budget for you, and offers more cost effective solutions to your current financial decisions. If Mint can receive more accurate data it will be able to maximize your financial efficiency and ultimately save you more money. For example, if Mint could predict how much energy you are going to use in January, knows that your car is due for inspection, and knows you’re going to need more eggs in a week it can create a realistic budget around that data. Additionally, if you’re spending too much for cable and mobile phone service it can find you the best deals that fit your usage and lifestyle.
Amazon Wins
The biggest challenge for Amazon will be integrating all of these smart devices and applications that are currently used separately. Google has recently been encouraging creators of smart devices to allow their devices to do so, and eventually I believe this will happen. Google certainly has the ability to compete in this space as well, but the big advantage for Amazon is that it already has an e-commerce company and one of the most efficient supply chains on the planet. Not only will the future of Alexa allow Amazon to be the primary vendor for all of a consumer’s needs, but it will allow them to have the most in-depth knowledge of consumer spending habits.
Opportunities for Startups
The odds that a startup will be able to develop a competitor to Alexa are slim to none. Amazon simply has too many advantages when it comes to supply chain and cost efficiency for it to be overcome by a company with far less resources and capabilities. The opportunity for startups lies in developing applications and building companies to compliment or support Alexa. The biggest and most lucrative opportunity will be providing cyber-security for in-home smart devices. Many of the creators of smart devices have received criticism for the lack of security built in to their devices, and in order for Amazon’s personal resource planning system to work it will need to be incredibly secure. Other opportunities include building smart devices and applications that automate or simplify aspects of peoples daily lives. Providing integrated solutions to menial tasks that take time away from family and friends will be a golden opportunity as Amazon’s Alexa changes our lifestyle.
I’d love to hear your thoughts on this theory. You can connect with me via Twitter: @scottmaronic or Email: scottmaronic@gmail.com
