Alexa and voice AI is to the connected economy what Microsoft was to the PC in 1990 and what iOS and Android were to smartphones in 2008: the operating system that will help it scale.
Microsoft’s Windows 3.0 operating system turned computers with DOS and green screens into accessible personal computing devices, at scale. Eight years after the PC’s debut in 1990, sales were closing in on 100 million units annually as PC manufacturers licensed the software that, in turn, drove more PC sales. Today, Microsoft maintains a 73% share of PC operating systems.
The iOS and Android operating systems, introduced by Apple in 2007 and Android in 2008, turned mobile phones (and later, tablets) into connected devices that did more than make a phone call, by providing fast, mobile broadband at scale. Developers created apps that lived in their app stores and handsets gave users access to those apps almost anywhere they happened to be. Today, Android has a 73% share of smartphones worldwide, while iOS has a 26% share. Android is heavy in low-priced handsets while Apple reigns supreme on the high end. In the U.S., it’s 47% and 52%, respectively, as of May 2021.
Alexa, introduced by Amazon in November of 2014, turned a cylinder called Echo into a voice-activated device that sat mostly on kitchen counters at home and gave its users a new way to access the internet.
Unlike the Windows, iOS and Android operating systems, Alexa wasn’t created to drive sales of a new category of connected device called a speaker, even though that was the device that marked its debut.
The intent was for Alexa to become the operating system for the connected economy, embedding its voice-activated operating system into the growing number of devices that were or could be connected to the internet.
In doing that, Alexa introduced the consumer to a new way of connecting with information and brands that heretofore required a touch or a tap on a keyboard or a physical interaction with a specific piece of hardware to complete a task. Alexa turned dumb devices like doorbells, curtains and faucets into smart ones when connected to them. People didn’t need to “fat-finger” a screen or use a keyboard — they could just say what to do.
More than that, Alexa gave consumers a consistency of access to the many experiences that these new connected devices made possible, powered by their own voice, and agnostic and even indifferent to the hardware that made the experience possible.
Seven years ago, Alexa 1.0 was about building the consumer’s trust using a humanized voice AI application named Alexa, and discovering the hands-free power of a simple, spoken command to master the mundane.
Over time, its voice AI operating system has the potential to move consumers and businesses closer to an always-on connected commerce ecosystem, by leveraging that trust and embedding payment and identity credentials into a growing portfolio of connected devices powering new use cases that define the consumer’s daily routine.
It’s something that will become far more important as more and more devices get deployed through the retail and commercial physical space, penetrated by super-fast 5G.
Humanizing the Operating System
Today, there are more than 80,000 Alexa skills — basically, voice-activated apps that do the user’s bidding — available in the U.S., and nearly 200,000 available globally, powering some 200 million connected devices.
According to Amazon’s website, Alexa powers everything from cameras to clocks, garage doors to guitar amplifiers, toys to timers and tower fans, home network systems to hot water heaters. Alexa can also be found in 171 car models from 26 different automotive brands. Not to mention lots of gas pumps.
Fire is technically the OS that powers Alexa, but no one other than those who develop Alexa skills talks in those terms. Its users just talk about Alexa.
Consumers don’t say that it’s the Echo that keeps track of their weekly shopping list or orders a pizza from Domino’s. It’s Alexa. It’s not the Caseta lighting control that makes the lights go on and off or dim on demand, but Alexa. The Echo Show might display Ina Garten’s recipe for Chicken Marbella (really worth making), but it’s Alexa the consumer asks to display it. Consumers may buy Kohler faucets, but it’s Alexa that they ask to turn them off and on.
None of that is lost on brands and retailers. A simple Google search for Alexa washing machines makes that point. Alexa is both a keyword as well as a means for brands and retailers to market their products and/or inventory of smart washing machines.
A Buick commercial featuring one of its new models goes out of its way to describe it as an “Alexa” rather than a Buick — and all because it comes integrated with its voice AI. The commercial is less about the car and more about the experience of driving it — and using the in-car experience powered by Alexa to make dinner reservations, get directions, turn the house lights on and play music en route.
Across the Consumer and Business Chasm
PYMNTS research finds that 31% of U.S. consumers have a voice-activated speaker in their homes, in addition to other voice AI-connected devices like doorbells, appliances, TVs and curtains. Alexa is reported to have 68% share of the voice AI market.
PYMNTS research of a national sample of 10,000 U.S. consumers – which was conducted in April and May of 2021 – also finds that most use those devices to support the simple, mundane tasks that Alexa was intended to transform. Managing home security, controlling the lights, creating to-do lists for chores and shopping lists for grocery and food and accessing information related to their local communities top the list of ways consumers use them right now.
Surprisingly or not, 25% of consumers report using their voice-activated devices to make a purchase; another 19% haven’t, but say they might. Ordering food and groceries are among the more popular payment-enabled use cases.
That’s a consistent trend.
Over the last several years, PYMNTS research has tracked a growing number of consumers using voice-activated devices to buy things. The introduction of devices with screens has helped boost those numbers, along with the availability of skills on the Alexa app on iPhones and Android phones enabling users to say and pay. Not to mention the practice consumers have with using Alexa, the confidence they have built in doing so, and their experience with Amazon payments as a secure way to transact.
Amazon has since followed consumers to the workplace.
According to Amazon, companies from Conde Nast to GE to Brooks Brothers and MicroStrategy have now integrated Alexa into their employee productivity tools, laying the foundation for a fully smart office, activated by voice and integrated across the enterprise for their on-site and hybrid workers.
Alexa is being tested in hospitals’ operating rooms to run surgeons through a checklist of the processes and procedures necessary to prepare the room and the patient for surgery. It’s replacing call buttons in hospital rooms for patients to use when help is needed, and to control devices in the hospital that once required a person to physically set and monitor.
Alexa is also said to support pediatric patient settings as a way to provide patients and their families with access to information and commonly asked questions about treatments and procedures, making doctor and patient encounters more efficient and valuable when they meet face-to-face.
Almost anywhere, a person’s voice can now replace the need to toggle between physical devices and screens and physically interact with a piece of hardware to complete a task.
Voice as the Connected Economy’s ‘Wake Word’
Alexa isn’t the only voice AI-activated operating system. Google and others are in the mix. More may enter, and maybe they’ll even leap-frog Alexa. I don’t know. Anything can happen in this intense, dynamic competition.
What I do know is that voice AI-activated operating systems are a huge development. They are the third great OS wave — yet another disruptive innovation that will unlock new forms of innovation, adding value to people and businesses.
The reason this is so important is that just about every device, everywhere, can now have an internet connection — and soon, that connection will be able to handle vast amounts of data quickly, even faster than before.
This, and similar operating systems with voice-activated skills, will power connected devices for connected consumers and businesses. And consumers, with their growing portfolio of connected devices, will want a way to streamline now discrete apps, devices and use cases into a single voice-activated command — at home, in the car, at work or anywhere else they may be.
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