Amazon Alexas+ Prime announcement emphasizes the new role of services in the home, as well as the value and convenience because devices can be interconnected in the home. At the same time, folding the smart speaker group under Amazon Prime revenues helps support this initiative to build service and new commerce revenues directly from the smart speaker. Consumers will be slow to adopt this type of service on its own; adding it to the Prime Video subscription adds value for that group, is a shift from a hardware first to a service strategy, and exposes a huge number of subscribers to the Amazon+ experience.
This announcement signals a strategic shift in how Amazon positions its Alexa ecosystem—moving beyond smart speakers as standalone devices to a broader, service-driven model. Ultimately this is about the ease of commerce, advertising, and bringing the different ecosystems in the home together through this device.
Here is how Amazon introduces Alexa+
Today, we’re excited to introduce Alexa+, our next-generation assistant powered by generative AI. Alexa+ is more conversational, smarter, personalized—and she helps you get things done. She keeps you entertained, helps you learn, keeps you organized, summarizes complex topics, and can converse about virtually anything. Alexa+ can manage and protect your home, make reservations, and help you track, discover, and enjoy new artists. She can also help you search, find or buy virtually any item online, and make useful suggestions based on your interests. Alexa+ does all this and more—all you have to do is ask.
Parks Associates covers all aspects of the connected home in its research, including smart speakers, which we categorize as a consumer electronics device, and also the smart home market. Here are a few points to highlight in regards to this new announcement from Amazon.
Point #1 Adoption of Smart Speakers, Adoption of Smart Home Devices
Since 2019, adoption of smart speakers has steadily increased and now more than half of all US internet households report owning one of these devices.
Adoption of all connected devices continues to grow. Since 2015, US households have been steadily acquiring more connected devices, but this growth began to slow in 2023. Today, households own about one to two connected health devices and three smart home devices, on average. Consumer electronics such as computers, mobile phones, and entertainment devices are, however, slowly rising more towards an average of 13 per household. While growth of connected device ownership has leveled out in the past year, it is still expected to rise further – especially as connected health and smart home devices become more mainstream.
Point #2 Commerce is Digital, Growing Familiarity and Use of Voice for Purchasing
Consumer use of ecommerce is established and growing, with mobile purchasing in the lead. 88% of US internet heads of households shop online at least once per month via a computer or mobile phone.
The vast majority of consumers shop online today: 62% of respondents shop on a mobile phone and 60% shop on a computer monthly. Key demographics are leading the charge:
- 18-44 year shop online the most and strongly prefer mobile ordering.
- Households with children shop online more than those without; those with 3 children or more shop on their phones more than 7 times per month
- Online shopping across all platforms increases with household income
Consumers are already accustomed to making purchases through electronic devices and households with children are particularly fertile ground for new, T-Commerce applications.
Consumers are transacting in new ways. Some consumer rank voice control as a top way to purchase through devices like the TV. In general consumers are warming up to commerce beyond shopping online, putting the TV and other connected devices in the spotlight. Advertising dollars will shift to this area as well.
Point #3 Services are Emerging Everywhere
Viewing home services comprehensively reveals significant opportunities for smart home. As the smart home market matures, industry players seek and deploying new and sustainable business models that can ensure profitability over the long term. Alerts, security monitoring, and video storage are established services that accompany smart home devices, but manufacturers seek new models that can cover their ongoing cloud and support costs. Three potential paths we tested recently in new research includes:
- Attach service to product type: smart appliances, pool tech, and smoke/CO monitoring devices all have viable paths to attach services to the product offered, such as appliance maintenance monitoring and filter replacements; pool safety monitoring and water quality testing, and fire safety monitoring.
- Enhancing trades: Technology solutions can help skilled trades evolve their own services with next-generation or premium tier service levels. Companies like Resideo, NRG, Alarm.com through Building36, and Camereye offer companies in the HVAC, plumbing, electrician, and pool services industries new ways to connect with and support their customers, generate leads, and smooth out seasonal spikes in business.
- Smart home support service: The average consumer owns 17 connected devices in the home, and nearly half of all US internet households owns a smart home device. Consumers need support for this growing technology footprint in their homes and companies like Oliver IQ and Daisy see an opportunity for dedicated technology support to the home as a new type of home service.
There is untapped opportunity to leverage the growing base of smart home technologies to generate service revenue, whether directly to the consumer or as a B2B arrangement. The Alexa+ announcement is tapping into this huge opportunity for future revenue through commerce and service, with voice control being a way consumers can engage and transact.
We will continue to see new demands for integration between devices in the home, and the smart speaker plays a great role as a point of integration, control, and convenience through voice controls.
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