A lot of ink (or pixels) has been devoted to covering Amazon’s device launch this week, including my own contribution. The biggest themes emerging are concerns about Amazon building a surveillance apparatus in your home and how its theme of ambient intelligence doesn’t seem to offer much value in exchange for all of the data a consumer has to give up. Also, some people are concerned about Amazon’s lack of a clear vision.
But when I look at Amazon’s announcements from Tuesday and the previous four years, I find myself growing concerned about Amazon’s efforts to monetize the infrastructure that will underpin the smart home and the pricing of services it’s launched based on its ambient intelligence.
Let’s start with the basics: Amazon builds services. Its business is based on building platforms and selling things to customers on that platform, whether the platform is Amazon.com, Kindle, or Amazon Web Services. A key to its success in selling services and adding to the value of its platforms is that it can see what the customers of the platform are buying and using, then invest its own capital in creating similar items or new services.
This is why every year at AWS Re:Invent, a cluster of startups whose businesses were built to offer value on top of AWS go home having seen AWS decide to horn in on their feature set. It’s also why people who sell on Amazon get so frustrated when Amazon copies a popular item and sells it for less. But what does this have to do with Amazon, Alexa, and the smart home?
Most people — myself included — looked at Alexa as a way for Amazon to create a new platform to manage the smart home. Much like the Kindle was a device designed to offer an entire library delivered by Amazon, Alexa was a device designed to offer consumers control of their home environment. But with the Hey Disney deal, which has the entertainment conglomerate putting its own content and digital assistant on top of the Alexa platform, it looks like Amazon is building voice interaction and control of devices as a service.
This imagined Alexa service will let companies provide easy ways to program integrations between smart home devices, voice interactions with those devices, and a means to sell those capabilities to others. Along the way, companies can take advantage of new Alexa offers, such as letting Alexa memorize and store your face for later identification and learning about sounds such as the alarm your fridge may make that might be important to the consumer.
But as brands begin to use this technology more and build Alexa deep into their products, they are handing Amazon even more data. Amazon is clearly tracking what devices sell well in the smart home and offering its own versions of them, likely to the chagrin of its partners.
Most of my worries lie in Amazon’s parsing of that data to offer a series of services that will govern how your home functions in the year ahead. Subscriptions were always going to be part of a connected smart home, if only because it costs money to keep a connected device operating and secure. For use cases like storing video feeds for a month, the cost of a subscription made sense, because cloud video storage requires a lot of resources.
Now that people are used to paying for video feed storage or data subscriptions for some smartwatches or dog collars, Amazon is taking it much, much further. It launched an array of subscriptions ranging from having a person watch your home to paying for the ability to remotely access a relative’s Echo to help in a caregiving situation. It also added a bunch of new fitness and meal prep features for its Halo subscription.
As it rolls these services out, I see a smart home developing where I may end up with a bunch of interoperable device basics thanks to standards like Matter, but little utility or smarts unless I pay for a subscription. So I might get remote access to turn my lights on or off, but if I want those lights to follow circadian rhythms or work as part of a security system, I’m going to have to pay for it.
Sure, Amazon will continue to make money selling services to others who want to build connected devices on AWS or use the Alexa platforms for custom voice interaction, but for real value, Amazon is going to tie aspects of its devices and others into monthly subscription service offers for security, wellness, energy savings, and whatever else it can package together.
This is unfortunate because I had really hoped for a smart home that would make it easy for consumers to pull together the devices of their choice and then build their own optimizations. Sure, maybe not everyone would want to do that themselves (and those that want to avoid Amazon today still have choices in Home Assistant, SmartThings, and others), but the capability would be there.
But as we level up to ambient intelligence, there are new sensors and capabilities (such as using machine learning to recognize a person’s face or voice) that won’t be included in Matter or other standards. So for fancier and more intuitive smart homes, get ready to smash that subscribe button.
If you’re thinking about building your own smart home subscriptions, may I suggest taking a look at what makes a successful subscription?
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