Battle for world dominance starts on your kitchen bench: herald the new era of voice assistants
What is the most important business battle of the coming decade? Dominance of the gig economy? The trade war between China and the United States? Control of the potentially vast markets for driverless cars, or for alternative energy, or for exploiting space. You can make a case for all of them.
But, in fact, the most crucial competition is set to be played out in your kitchen over the next couple of years. Voice assistants such as Amazon’s Alexa and Google’s Home have the potential to be just as disruptive as the smartphone was a decade ago — and perhaps even more so. They can vastly increase the amount that is done on the web; they can make us more productive; and they have the potential to kick-start a whole new micro-economy. For investors, and for anyone in business, there is no more significant contest than this one right now.
The competition in voice computing — smart devices that sit in the corner and take instructions — is getting more intense all the time. This week, Alphabet, as Google’s parent company is now known, is expected to unveil a beefed up version of Home voice assistant at its Developers Conference, traditionally a launch pad for new products. Its Home device is expected to have sold a million units by the middle of this year and is on course to more than double that by the close of 2017.
It is a tough market, however. You can hardly move right now for ads for the Amazon Alexa plastered all over the billboards. The Seattle-based retailer is notoriously cagey about releasing data — as opposed to harvesting it — but Morgan Stanley estimates it has sold more than 11m of the devices so far, with 9m of those shipped over last Christmas alone. It has been one of the fastest take-ups of any consumer product ever. Last week, Amazon added the Echo Show — a slick, screen-based device that takes voice commands — to its line-up of devices.
Voice assistants have the potential to be just as radically disruptive as smartphones.
At the same time, Apple is working furiously on an upgraded assistant of its own — and keep in mind that its Siri function was the first piece of software to bring voice commands to a mass market. Microsoft is gearing up to launch the Invoke, its own voice assistant. And no doubt there will be plenty of start-ups out there touring the venture capitalists with their own ideas — the market is certainly both new and big enough for a fresh company to capture a big slice of it.
Voice assistants may look like a gimmick. You can ask them to play a track from Spotify, update you on whatever bonkers tax rise Labour has announced, or order some groceries. That’s handy, but at first sight hardly revolutionary. That said, when the iPhone was launched in 2007, it didn’t necessarily look like a device that was going to spawn whole new industries. In the same way, voice assistants have the potential to be just as radically disruptive as smartphones.
Why? Here are three big trends to watch as they become ubiquitous.
First, they will turbo-charge the transition to internet shopping. Already, 45pc of Amazon Echo users have used it to add items to their shopping list. True, internet shopping is already huge. Of total retail sales, 16.8pc are now made online, according to Twenga Solutions. But the sheer ease of voice devices, combined with cheap and reliable drone delivery, as well as convenient collection services such as Doddle, should make that even bigger. Why not 30pc or even 50pc? And that is just stuff we buy. Only about a quarter of our banking is done online, but when you can simply command a device in the corner to pay the gas bill - or not pay it, as the case may be - even fewer of us will see any need to visit a branch. The high street and out-of-town shopping malls are already having to reinvent themselves. As voice computing grows, that will only become more urgent.
The first wave of computing didn’t do much for productivity, but this round could dramatically enhance it.
Next, we will be able to multi-task more easily — and that will make us more productive. For the last 40 years, every form of computing device has had one thing in common: a Qwerty keyboard. That is no longer going to be true. Voice assistants, especially as they grow in sophistication and power, will dramatically cut down the amount of work involved in sending an email, logging into a meeting, or contributing to a report. That will allow us to work more efficiently — and work in different places and juggle different projects as well. The first wave of computing didn’t do much for productivity, but this round could dramatically enhance it.
Finally, it will create new types of products, most of which we haven’t even begun to think about yet. After the smartphone was launched, the app economy sprang up from nowhere. Remember, we’d never heard of Uber (current market value $70bn) or Spotify (worth $8.5bn) or Snapchat (worth $23bn) back then. No one particularly predicted that apps would be so lucrative. The same may well be true of the “voice economy” over the next few years. Such as? We might well see the emergence of voice-controlled learning for example. Or counselling, or fitness or career coaching (44,000 people work in the coaching, counselling and motivation industry in the UK, so that is already a big business). It’s a platform — and over the next few years, smart entrepreneurs will think of all kinds of useful things that can be done with it.
One thing we have learnt about technology in the four decades since Bill Gates and Steve Jobs started messing around with computers in their garages is that major new devices unleash a wave of growth. The original PC was the platform for thousands of companies. The smartphone was the basis for the app economy, and so on. Voice computing looks likely to be just as disruptive.
That matters, both for businesses and for investors. The companies that get the biggest slice of that will dominate the 2020s. It is surely no exaggeration that whichever of the tech majors manages to capture the industry will almost certainly become the biggest company in the world. Right now, it looks like Amazon, which is one reason why it is closing in so fast on Apple. But it is still so new that it would be a mistake to write anyone off — eight years ago, few predicted Google’s Android would dominate smartphone software. Investors need to get that call right. Likewise, businesses need to work out how it will impact their industry.
The battle to control the voice assistant market is the most fascinating in the world right now —and it is being fought in your own home.
The Daily Telegraph, London
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