Will Google Home And Amazon’s Echo Be The Next Battleground For The Two Companies?

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As Amazon (NASDAQ:AMZN) looks to hook consumers on its platform, moving them away from product searches on Google, home automation appears to be the next battleground for the two companies. Google recently launched “Google Home”, its voice-based home virtual assistant which is a direct competitor to Amazon’s Echo. Amazon has been increasing focus on its Echo device and recently launched a cheaper variant called Echo Dot to increase usage.  It has also aggressively expanded the capabilities of its virtual assistant Alexa, adding new features every week.  Echo owners spend more on Amazon’s e-commerce website, driving overall revenues for Amazon.  With Google Home, competition has intensified and the new device has several promising features. However, with a head start and constant focus by Amazon to improve the features of its Echo device, we believe for now the company has a competitive edge in the smart home products market.

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Search Functions Vs. Product Integration

Amazon has the first mover’s advantage in the home automation space and, by actively focusing on Echo’s capabilities, the company has ensured that it is integrated with several smart home devices that can be controlled through its personal assistant. Amazon has been actively integrating Echo with various products, making it the one-stop shop for home automation. Google Home has similar features but the number of integrated products is less,  since the device is still at an early stage. However, Google Home is likely to work better in terms of search capabilities, since it can tap into Google’s search history.  Its virtual assistant will be also able to take advantage of Google’s ecosystem, with its ability to talk to other Andriod apps installed on the user’s phone. While it currently lacks both a number of features and Amazon’s product integration, it does have the advantage of being backed by Google’s huge integrated ecosystem of services.

Retaining Users On Their Respective Platforms

Both Amazon and Google are looking at home automation devices or virtual assistants to attract and retain users of their respective platforms. Both, too, aim to eventually become the one-stop shop for all online needs. Google has the advantage in this goal with the richly varied areas of its site, such as email, maps, travel, e-commerce functions and a host of android apps developed by third parties.  Amazon, in turn, is looking at innovative ways to hook users to its e-commerce platform. With Alex and Echo, Amazon can create a loyal  base  of users  (including its Prime Members) who will spend more on its e-commerce website. However, Google has the ability to offer a more integrated virtual assistant with better features.

Currently, Amazon has the advantage over Google with higher product integration and a cheaper variant of Echo. In the future, whether home automation companies will tie up with both Amazon and Google to integrate their devices, or choose one over the other, could be a major deciding factor in who wins the battle.  Virtual assistants can play a key role in driving overall revenues of both companies and we believe this will be a battleground between Amazon and Google for several years to come.

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