With sales of $ 72.4 billion and a $ 3 billion gain, Amazon scored a record-breaking holiday quarter, but it does not make much money with its best selling article, the Alexa Echo Dot. While the ecommerce giant said the device was the bestseller of 2018 for all its products, it reminded investors that echoing devices have no price "to make money".
Instead, Amazon sees echoes as another means to connect with its customer base – that is, with the greatest enthusiasm of its customers.
"There's a group of customers who use our devices and then we monetize it in different ways – the Amazon and the video and everything else," said Amazon's Chief Financial Officer Brian Olsavsky, ahead of investors on Thursday.
While some reports have dismissed Echo Devices' potential for online shopping, Amazon seems to be playing the long game in terms of voice computing. With an echo in the home, consumers are more likely to remain Prime subscribers, stream prime music or audiobooks, or Prime Video on their devices with one screen. As Amazon further develops its e-commerce strategy with Whole Foods and Prime Now, Echo Echo also sees it as a means to get items to your door within an hour or two, simply by voice commands.
That said, at the moment, Amazon's goal is to bring an echo into the home – even if it has to sell the gadgets at cost (or less).
And the devices sell themselves. Amazon said the Echo Dot was Amazon's largest-selling product during the holiday quarter, and customers purchased "millions more Echo family devices in 2018" than in 2017.
Amazon also announced last month that more than 100 million Alexa devices have been sold to date, including the Echo Dot and other Echo branded devices as well as third-party devices.
As the company usually shares exact numbers when it comes to such things, this was a remarkable milestone.
Of course, Google responded quickly with the news that its Assistant AI will reach one billion devices by the end of January. However, it was not a fair comparison, because Google counted Android smartphones, while Amazon's number, which we confirmed back then, did not include smartphones – although you can use Alexa within the Alexa app and even within the widely used Amazon shopping app.
However, echo devices are not Amazon's only means of introducing Alexa to consumers.
The Echo Dot is the bestseller for Alexa-powered Alexa products due to its low price and regular discounts on major shopping events such as the 2018, Black Friday and Amazon's own Prime Day.
In 2018, the company launched more than 100 new products incorporating third-party Alexa. That's over 150 in all. Alexa works with over 28,000 devices, including smart home devices and other hardware from 4,500 brands.
Amazon tries to figure out how to put Alexa in more things. It even makes fun of it in his latest TV ad to be aired during the Super Bowl.
The ad refers to a more unusual device – the AmazonBasics powered by Alexa Microwave – but rips the Alexa devices that did not work – such as an Alexa dog collar and a whirlpool.
Alexa skills exceed 80,000
The growing Alex ecosystem means that the number of things you can do with the Speech Assistant is also increasing through its voice apps, called "skills."
A recent number shared by Amazon yesterday was that the number of voice applications created for Alexa now exceeds 80,000 worldwide. That's from the 70,000 capabilities that Amazon announced in December.
Amazon boss Jeff Bezos mentioned this number and other milestones regarding Alexa's improvements on Thursday in a statement.
"The number of scientists working on Alexa has more than doubled over the past year, and the results of the team's hard work are clear. In 2018, we improved Alexa's ability to understand requirements and answer questions by advancing machine learning by more than 20 percent. We've added billions of facts, making Alexa more knowledgeable than ever. The developers doubled the number of Alexa capabilities to more than 80,000 and the customers talked to Alexa tens of billions more than 2018 compared to 2017, "said Bezos.
The company announced in November that it now has over 10,000 employees working for Alexa as a reference. However, building a knowledge base of questions and answers is a challenge – something that Google has been working on since the introduction of Knowledge Graph in 2012.
At the end of the day, consumers can choose a device not just for the facts it can spit out, but rather because it fits in the house in a different way. Alexa can play your music and share messages like any voice assistant, but also works with other Amazon devices such as ringing and Amazon security cameras, keyless entry systems, and more. And it can deliver your food and other items.
Google does not have a successful e-commerce business and has just lost a major partner for its Google Express shopping service after Walmart left the platform.
This leads to a disadvantage of Google, as the assistants respond more to our needs, not just answering questions or turning on the light, but letting something appear at our door. If Amazon has to give away a few million devices to stake its place in tomorrow's shopping, it believes it's worth losing money.