Amazon Echo Data Leaks, Shows Poor Engagement

Posted on August 7, 2018 by Paul Thurrott in Smart Home with 27 Comments

Amazon’s Echo devices may still dominate the smart speaker market, but customers rarely use them to purchase goods from the e-retailer.

Which, you may recall, was the whole point.

“Only a small fraction of smart speaker owners use them to shop, and the few who do try it don’t bother again,” a new report in The Information notes. “[We have] learned that only about 2 percent of the people with devices that use Amazon’s Alexa intelligent assistant—mostly Amazon’s own Echo line of speakers—have made a purchase with their voices so far in 2018, according to two people briefed on the company’s internal figures.”

Another interesting tidbit from the report: Amazon has sold about 50 million Alexa devices, The Information’s sources claim.

So why is this data important? Two reasons.

First, Alexa and the Echo speakers came to market for a single reason only: To provide Amazon’s customers with yet another way to easily make purchases from its online store.

Second, while Amazon does currently lead in the market for smart speakers, Google is very quickly catching up. And I still expect Google to surpass Amazon, perhaps as soon as by the end of 2018.

Not being able to monetize Echo and Alexa is a problem. And it’s going to be a problem for Google, too. In that case, the online search giant will attempt to leverage its own Google Home/Google Assistant user base with, yep, you guessed it, advertising. Something that Google has publicly stated is coming to the platform.

 

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Comments (29)

29 responses to “Amazon Echo Data Leaks, Shows Poor Engagement”

  1. maethorechannen

    First, Alexa and the Echo speakers came to market for a single reason only: To provide Amazon’s customers with yet another way to easily make purchases from its online store.


    I disagree. I think the primary reason was to sell Amazon Music subscriptions with an "Amazon Basics Sonos". Once they added voice control as a USP over other network speakers selling stuff became an obvious but secondary thing to do.


    Not being able to monetize Echo and Alexa is a problem.


    There are other ways for Amazon to make money than directly selling things through the device. Like the music subscriptions or selling "Works with Alexa" gadgets on the site. Or just on the devices themselves.

    • Polycrastinator

      In reply to maethorechannen:

      This. Google is in far more of a bind here. When I want to add smart lightbulbs to my Google Home setup, where do I buy them from? Amazon.

    • Paul Thurrott

      In reply to maethorechannen:

      Literally, the reason Amazon agreed to make the Echo was for voice-based purchases. :)

      • Chris_Kez

        In reply to paul-thurrott:

        Source/citation? That seems like an incredibly narrow view for Amazon to take.

      • Skolvikings

        In reply to paul-thurrott:

        Okay but things change. Doesn't mean it's a problem for them. I have two Echo devices and it keeps me in the Amazon ecosystem. For instance, because I have Echo devices, I decided on Fire TVs. Since I have Fire TVs, I tend to rent/buy movies from Amazon. I also purchase Alexa compatible gadgets such as my two home thermometers and my Phillips Hue lights from, guess where?, Amazon of course.


        Similar to how people invested in the Google ecosystem prefer Google Home devices. But if I'm currently into the Amazon ecosystem, but they didn't have Alexa, I might look into Google Home. Then I'd probably consider switching to Google Music. And Google for my TV and movie purchases and rentals. Etc. I've seen many comments on this site where people admit to just this. They picked a digital assistant and then went all-in on that ecosystem.


        One of the other ways I imagine Amazon is benefiting from Alexa is the treasure trove of information they gain from users. They know what I watch, what I ask questions about, places that I seek recommendations about, etc. I assume they can then use that data to better tailor the overall Amazon shopping experience for me.

  2. skane2600

    The economic feasibility of these devices is only partially dependent on using them for sales. Last time I checked Amazon wasn't giving them away. We don't really know what the margins are on these devices.

    • Tony Barrett

      In reply to skane2600:

      Amazon aren't giving them away, but Amazon's business model for the Echo and FireTV line is almost to give them away at cost or even below hoping buyers will use them for Amazon services and for buying products. It appears very very few customers are actually doing this though, with no sign of it improving.

  3. Rob_Wade

    I want Cortana, period. I will accept nothing else. We have Cortana always-on, active on our Xbox, our Lumia phones, our Surface Pro devices as well as my studio computer and server. I don't need yet another device listening for commands. I'm not surprised that Echo is not being used for its intended purpose. Nobody truly gets it, though. I want a life of hands-free control of my data and my world. I want an AI/assistant that is immediately aware of every single input source AND output destination. I want an AI/assistant that can take my command, regardless of which device or devices it hears the command from, and execute that command on any device---better, it should understand the context and other telemetry and provide the response on whichever device makes the most sense....or it should ask me.

    • Tony Barrett

      In reply to Rob_Wade:

      With no mobile platform to make it a first class assistant, Cortana carries little weight in the industry, so is really just an afterthought for devs. I think Cortana as you know it will eventually disappear, or become a cloud only enterprise assistant. Amazon are already trying to get Alexa onto Windows - and partially succeeding. If that gains traction, Cortana has nowhere to go.

    • mestiphal

      In reply to Rob_Wade:

       I want an AI/assistant that is immediately aware of every single input source AND output destination.


      But unfortunately Cortana doesn't do this either, if you are in your living room and invoke Cortana, does she answer off your phone, your xbox, or both?


      This is exactly the same problem with Skype, once Microsoft figures out a way to tell where you are, and what device is closest to you, it's all a big mess.

  4. Patrick3D

    Amazon gets an extra $3.99 a month from me for their Echo Unlimited Music plan (there's the monetization for ya'.) Over the past 2 weeks I dumped HomeKit and switched entirely to using Alexa for controlling smart home devices. Dumped Philips Hue and switched to TP-Link Kasa outlets and bulbs that work over Wi-Fi without any hub. There isn't a single day that goes by at this point where I don't use Alexa to control devices and/or listen to music.


    Purchasing though, I only did that a single time when there was an exclusive discount, I think it was for a Kindle Fire HD, that you had to order using Alexa to receive the benefit. I don't know why anyone would buy something sight unseen. I guess if I were a millionaire I might, but I shop based on price, not convenience. I cannot fathom Google or Siri being any better at shopping.

  5. polarPorg

    Remember way back when businesses just sold you a good...the only monetizing was selling an excellent product so I'd go back and buy from them in the future? Now everything is razor blade or service.



  6. shameermulji

    Apple's HomePod is looking better everyday.

  7. AnOldAmigaUser

    I will not be running out to buy either product. No one has clearly explained the benefits of home automation that would offset the complexity it adds to the systems, nor the security (The S in IoT stands for security) concerns with the devices. Both assistants run on devices that people already own, so these speakers are just novelties, and it seems that people are just using them for parlor tricks.

    How creepy would it be to have your device suddenly blurt out an ad because it has detected presence in the room, or interrupt a conversation to add, "You can buy <something> <someplace> for just <some price>." Will it even get the context right? Perhaps the comic relief would be worth something, but the ad?

  8. harmjr

    I think amazon is playing the long game. I would think that more selling power of these device today is not ordering a book or shoes but Music. Also Alexa skills controlling light bulbs and guess who knows when that bulb will burn out - Amazon will. Then data mining what do you search for how do yo use Alexa. What commands do you ask it. I don't really think the current generation of adults 25 to 90 year olds will shop on this device. We are the generation that is comfortable not touching the items we buy but can we buy with out seeing it nope. However kids today who grow like on Star Trek speaking to the computer well they will use this. We are the generation that is the guinea pig for these devices not the market.

    • Dashrender

      In reply to harmjr:

      I think that only works as long as returns are free, and the person ordering isn't in a hurry for something.


      I don't order regular household items online, at least not yet. I could see Alexa, etc being useful for those things you buy regularly - sight of those isn't required, because you already know them. But new things? I can't really see anyone, at any age ordering something that will show up anywhere from a few hours to several days later that would want to order without seeing it first - what if you don't like the color? even if you tell me it's red - is it cherry red, or fire engine red, etc.


      I'm not sure ordering sight unseen will ever be popular, at least until we have ST Replicators in front of us making and destroying things as fast as possible (i.e. seconds) based upon our whim at the moment.


      • bleeman

        In reply to Dashrender:

        If you have the Echo Show or Echo Spot you can see what you're ordering. However, I still haven't used it for ordering. I purchased the Show for video calls, occasionally watching videos from Prime while working on my computer and for the better sound when listening to music versus the Echo Dots. I also like the fact that it displays my daily calendar as I have it synced with Outlook. With the various sales they've had on the units I've saved a lot.


  9. toph36

    Don't have an Echo at this point, but could see just using it as most people do. That is to play music, and maybe ask what the weather is. When making purchases online, most people want to see photos of what they are buying.

  10. F4IL

    Only 2 percent translates into a very small number. With this ratio, this simply doesn't scale for amazon.

  11. provision l-3

    Is that sold 50 million in 2018 or 50 million in total?

  12. anchovylover

    We have a couple of Google Mini around the house. If we show enough interest in a product using the Mini then a couple of ads providing competitive pricing for the product would be helpful.


    On the other hand, if the ads are just random ads from companies who pay Google to play them then for us that would be unacceptable.

  13. Daekar

    The moment they put ads in a smart speaker is the moment they lose all potential sales to me.

  14. Ryan Coodey

    I really want to see Amazon succeed with the Echo line, but afraid their focus is too much on them being another means for Amazon sales. Or not really sure what their focus is anymore. They really need a UserVoice page that is not just for developers.


    I have several and for my family they are great for one thing, giving the house a voice for home automation. But Amazon who did some great things out of the gate in this space is now not taking it across the finish line. For example, location based awareness, can say "turn on the light" and it knows the room to turn on (great!)... but cannot say "turn on the fan". Hard coded functionality for just lights, why? Also cannot ask simple things like, "Hey Alexa, are any lights on?".


    I'm holding out for the other rooms to see if Google gets there first, and unfortunately seems like they will at this point.

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