Apple’s Christmas Wish: Alexa Gets Lumps of Coal

If you think Amazon Alexa is just a wannabe Siri imitator, hurry up and read this to be ready before the tech bull sessions at the New Year’s Eve party next week. Apple has been working for a couple of years on an Alexa like home hub and now has an internal prototype, but still no product to sell. For those same two years, Alexa has been piling up thousands of small improvements based on invaluable real world feedback, and attracting creative developers to help them to enhance the experience.

With holiday presents getting more expensive every winter, my 5th grader Ella’s favorite gift this year, the Amazon Echo Dot, was a bargain at $40.

What makes Alexa and the Echo Dot not just a me too product, but instead innovative, fun, and actually useful?

For one, it’s not mobile. Having an always on, voice driven digital assistant is better when you know it’s always ready and always in the same spot. Siri can be always on, but requires a conscious thought process of “will it not work because it’s in my pocket?”, or “where did I leave my phone?”. Eliminating even a small need for conscious thought is a dream of all productivity product designers; Bezos owes the team a nice bonus for the achievement.

It also fits in well as a shared home appliance. Just like a microwave oven, everyone in the house quickly gets used to using it in short helpful bursts. The microphone and far-field voice recognition are simply outstanding, which means you mostly just start talking at it whether you are in the kitchen or laying on the couch. While helping with Christmas dinner, Ella instinctively said, “Alexa, set a timer for 3 hours” and bam, no need to read the microscopic text on our oven’s bad user interface.

Sometimes it’s better than Siri. On my iPhone I have Spotify and Pandora. But if I say, “play Rush” Siri says, “Sorry, I cannot find Rush in your music.” When I request the same of Alexa, invisible airwaves crackle to life with the opening riff of Limelight. Turns out Alexa doesn’t even need Spotify or Pandora (although it can use them) because Amazon Prime members get free access to 2 million songs and a slew of radio stations.

Alexa also has over 5000 apps (Amazon calls them Skills) built by 3rd party developers. There are apps to play soothing background sounds like rain and thunderstorms, and apps to integrate with lots of Internet services.

But Alexa is not all myrrh and frankincense. Amazon touts their retail partners, but it remains to be seen how far Alexa can go as a shopping client. For example, I don’t want to browse restaurants by voice, and even if I know what I want, it’s probably easier to order a pizza with a phone app. Another big, and very natural play, is home automation. However, Alexa doesn’t play well with Apple’s HomeKit ecosystem, leading to a bit of Blue-ray/HD-DVD type compatibility confusion.

Where does this leave Apple? Alexa is a such a clear win on Apple’s own turf there is little doubt they are rushing to deliver a competitor (Google has already been forced to respond, releasing Home in November). With Apple’s talents you might think Amazon should be worried about getting steamrolled. They are still too embarrassed to even discuss the time they tried to compete with Apple and others with the Fire Phone. It was a bloodbath — that cost them customer goodwill and over $250 million in losses. This was scary stuff for a company that has a 1% profit margin when things are going well.

However this time things are different. It cannot be overstated what a huge accomplishment Amazon’s success with the Alexa App Store is. Rallying developers behind any new App Store is incredibly difficult. Even Microsoft had so much trouble doing this that it crippled efforts to make Windows phones popular.

Crucially, Apple is the one playing catchup this time. In an unusual strategic error, Siri was only opened up to 3rd party apps a few months ago with iOS 10. Moreover, Siri apps do not have the mindshare or range of capabilities that Alexa apps have. If Apple waits till iOS 11 (fall 2017) to launch its own Alexa competitor, it buys vital time for Amazon (and Google) to keep building momentum. With speed, momentum, and ecosystem being the lifeblood of successful technology platforms, Apple will need to execute with precision in this space over the next few years.

If you haven’t tried it yet, the Echo Dot (or the bigger Echo) justifies a purchase on its own merit, but it’s also as an inexpensive way to get a feel for the future of home technology. It’s useful and fun, even for those who own an iPhone.

note: Echo Dot price was at Amazon 12/23/16 during holiday sale.