Traditionally, most rooms in a house have not had information devices in them. Some rooms may have a TV and some may have a radio. However other than that, most rooms do not have any installed equipment that enables the residents to quickly get information.
There is one exception however, and that is clocks. Many rooms have clocks either hanging on the wall or sitting on a mantelpiece. Clocks provide information that is vital for modern life (“what time is it?”) with a mere glance, and they are so useful that people put them in their bedrooms, living rooms, kitchens, home offices, and sometimes even in their toilets.
I wonder if the best way to think about Smart Speakers and the utility that they may bring to the home, is to compare them to these clocks. Can Smart Speakers provide the same benefit that we get from clocks around the house? Is the information that Smart Speakers may provide as important as telling the time? Why do we still need wall clocks when we can easily wear wrist watches instead? Does the UI need to be distilled to a simple glance instead of a voice UI?
If you adopt this viewpoint, then I think you can naturally arrive at the following conclusions.
- People generally don’t need too much information in the house. The time is a rare case of something that we often need to know in multiple rooms.
- If the information is important and frequently needed, then people will want to put devices in multiple rooms instead of relying on a watch or a smartphone that they carry around with them.
- People will prefer to get the information through a simple glance. A voice UI may be too inconvenient. For example, instead of a smart speaker that can tell you the weather when asked, a wall clock with a display showing this will probably end up being more useful.
The following is a post that I drafted on 9-Jan 2017, more than a year ago. Given the reported excitement over Alexa at CES 2018, I thought it would be a good idea to publish it and to see how things have changed in a year. I am actually a bit surprised at how relevant my observations remain today. I have left it as I did a year ago, and hence there are parts that are obviously unfinished.
One of the more interesting things in tech this month was the presence of Alexa enabled products at CES. Although this seems to have taken quite a few people by surprise, it’s actually quite easy to see how this happened, and why other aspects of an AI enabled interface (answering via Google Graph or voice control of your smartphone etc.) have not seen excitement anywhere near. One critical caveat though is that at this point, we have only seen excitement from home appliance vendors and not from the consumers; at this point, we have not yet seen real demand.
The following is a summary of my thoughts on this.
Who has the capability for a voice UI?
- More than a year ago, I wrote a comment on Techpinions that “Amazon, by offering Echo voice to other companies, is essentially making it the new AWS. This could result in even small startups using sophisticated voice technology”. This is essentially what we are seeing at CES. We are seeing many startups and non-tech companies integrate with Alexa to provide a voice UI to their products.
- Essentially, nobody needs in-house voice recognition technology anymore to provide a voice UI to control their product. Anybody can do it. Importantly, since it will probably be difficult to significantly differentiate on voice, voice UI itself will become a commodity.
Who needs a voice UI?
- One huge problem with AI, and new category products in general, is that very few people need them. Impressive as Google Now may be, people have not yet shown much excitement over an assistant that peeks into your email and notifies you of the few events and appointments that it has managed to decipher correctly. There has been little need for assistants that try to learn everything about you and predict what you may want.
- It turns out that the people who wanted a voice UI the most weren’t end-customers. The ones that had the most use for a voice UI were vendors; they have always wanted something new and shiny to lure consumers to buy a new TV, a new refrigerator, a new microwave, etc. The perfect example would be TVs with 3D and 4K, devices that were previous darlings of CES a few years ago, but ended up being duds.
- What Amazon has provided is a promising (but yet unproved) solution. It provides hope for the eternal question; how do you get customers to spend a few more dollars on your commodity product? Home appliance vendors have forever been adding small incremental features to lure consumers into replacing their 5-year old device, and to get them to buy higher priced ones rather then their low-end offerings. Wider TVs, 3D, 4K, Internet connectivity, lower energy consumption, SD slots to view photos, etc. Despite being a dud in the consumer market, features like 3D and 4K were actually big topics at previous CESs.
How it adds up
- Amazon has basically provided a way to add a voice controlled interface to otherwise mundane devices, with very little effort and investment. Alexa-enabled devices can now tout headline grabbing titles like “AI-powered washing machine” and pretend to be something that’s genuinely useful and innovative.
- Importantly, we have to remember that the consumer is completely absent from the argument. The need for thes AI-powered devices comes from the vendors, not the end users. Like 3D/4K TVs, the excitement could be very short lived.
- Therefore, we have to keep in mind that this excitement is completely independent of how well Alexa’s AI performs.
- More than anything, this tells me how quick adoption of a product can be if you have hit a clear need. Conversely, it shows how hard it is to get the mainstream to share enthusiasm for a product without one. Here, we must keep in mind that AI is not the key because the existence of a need for it has not been demonstrated. The key is the ability to be buzzword compliant with minimum effort.
- One point of discussion is whether Amazon has managed to get a head start that is significant, of whether Google or Apple would easily catch up if and when they open up their ecosystems. As mentioned above, the motive for the home appliance vendors to be HomeKit/Siri or Google Home compatible is very strong. As long as Apple or Google provide an easy way to be compatible, then vendors will most likely rush in just like they have done for Amazon. Keep in mind that making your appliance compatible is probably much easier than developing an independent app, something that the vendors still do.
- Regarding the above, it’s also important to note that the replacement cycle for home appliances is very long, hence early leads are unlikely to translate to large share of installed base.
- The smart home has hardly taken off, and some pundits have attributed this to the lack of a central control. If this is truly the case, then we might see a surge in smart home appliance adoption, due to Alexa. However, we must also be aware that Alexa compatible device adoption alone is unlikely to be a reliable measure of smart home adoption, unless there is a clear price difference (with 3D TV adoption, even people who did not 3D bought them). We must be careful in how we interpret the numbers.
- The broad question here is what AI is really good for, and does the popularity of Alexa at CES give us a hint? Why would people want AI at all, and what level of AI would be necessary to solve the job. Although far from decisive, if the main job of Alexa ends up controlling home appliances through voice, without necessarily inferring or predicting your needs by peeking into your daily habits, email and calendar events, then that would suggest that a glorified, voice controlled macro library is what people want and need. That is, unless the task is complex, humans can tell computers what they need, and their isn’t a clear need for computers to be clever. If this is indeed the case, then Google’s Knowledge Graph and huge repositories of users’ private information may not be as useful as one may think.
- AI is already used to determine the best washing conditions for your specific laundry, and current AI may not significantly contribute to that.
AI does not have a job nor does it solve a need. Therefore it cannot be a product. It is only a technology.
Alexa at CES shows how it might be a product, or rather what AI might be useful for. Of course, ultimately the user will decide.
Alexa is something that will help drive sales of high-end commodity products.
Although cheap kitchen timers can be as cheap as just a few dollars, a premium one that you can use hands free might justify a $50 price tag. That was the only remotely useful use-case that I could find in this article, but maybe that’s enough.
The larger question would be, out of the tens of millions of people who purchased a smart speaker, how many people hooked it up to a smart home device e.g. smart light bulbs, smart locks? Assuming that this is what is going to be hot at CES, I wonder how large the addressable market actually is, which I expect is probably much much smaller than the total number of devices sold.
In a recent tweet, Benedict Evans brings up the point that business models are important for understanding the nascent smart speaker market. This is particularly important given a Reuter’s report that both Amazon and Google likely lost money on these devices during the holiday shopping season.
This brings up the question, what business models are these smart speakers really suited for, and have Google and Amazon exhausted the possibilities? Are there other companies with different business models that might enter the smart speaker market, and be even more aggressive or successful?
Nowadays, if you want to search for perspective, it is a good idea to look to China to see what the Chinese are doing (other East Asian countries are also illuminating). According to a report by Activate, there are quite a few interesting developments. In the chart below, Activate shows that in addition to Baidu and Alibaba which can be considered as counterparts to Google and Amazon respectively, we see the Asian messaging giants – Tencent (WeChat), LINE and Kakao getting into the game. What’s interesting is that these messaging apps are not just for messaging, but are actually portals to a whole variety of services spanning ride-hailing, deliveries, music streaming, digital payments and more. This means that without plugging in third party apps like how Amazon is doing with their “Skills”, WeChat, LINE and Kakao may be able to provide a battery of useful services that could be better integrated into the voice UI. They would also be in a better position to monetise directly from a variety of services compared to Amazon which only monetises through shopping or Google which doesn’t yet have a clear monetisation strategy yet.
Therefore, it seems that the East Asian tech companies have a better business model for Smart Speakers than any of their US-based counterparts. US customers are reported to use Smart Speakers only for very basic tasks, but is it possible that East Asian users will soon adopt more complex use-cases, simply because the better matching business models will encourage the services to be much better, more varied and more integrated. Who knows? If Smart Speakers turn out to be really successful, they might turn out to be the vehicle on which Chinese companies will finally penetrate the US market (although there might be significant national security issues with having Chinese ambient microphones in US households).