What’s the future of voice in an economic downturn?
Image courtesy of Amazon.
Voice has been one of the most successful technologies of the last decade, especially when it comes to the smart home. Thanks to innovations in natural language processing (NLP) during the 2012-2015 time period, voice became ubiquitous on our phones and in our homes. But now, with news that Amazon is downsizing its Alexa business and that Google is questioning what it can eke out of its Google Assistant, it’s time to take a hard look at how to make money in voice and what the news about Amazon and Google’s struggles mean for the smart home.
First up, voice and the smart home are related but entirely separate. Siri launched in 2011. IBM’s Watson was also playing Jeopardy back then. Thanks to hard work on speech-to-text and NLP software, we could talk to our phones and have them understand us — both to take transcription and complete programmed tasks. But speech wasn’t transformative on the phone, partly because the phone already had a pretty convenient and established user interface in touch and tapping. Many people were impressed, but talking to your phone to set an alarm or a reminder was still clunky and not in widespread use. It was a trick, not a transformational technology for most.
My three voice assistants all serve the same basic purpose. Image courtesy of S. Higginbotham.
Voice is a UI, not a platform
But the need for a new interface became clear when we started adding connected devices to our homes. I saw it back in 2014 when Amazon launched Alexa because I already had a home full of devices by then. Others were not so sure. Even Kevin doubted my enthusiasm. Voice was intrusive and still somewhat glitchy. When Amazon launched its smart home capabilities in the spring of 2015, voice really achieved a killer app. Or so everyone thought.
But voice isn’t the smart home. And Amazon’s Alexa layoffs and losses and Google’s issues aren’t an indictment on voice. It merely shows that no one has figured out how to monetize a digital assistant. Monetizing voice is a low-margin endeavor. Voice is the user interface and the digital assistant is the platform. It’s like we’re confusing the ability to touch to navigate our phones with an app store.
And because voice is going to be an essential way people communicate with ubiquitous computers, we have to get voice right. It’s not going anywhere. But trying to make money on it outside traditional ways companies monetize user interfaces is a mistake. Logitech sells keyboards and mice. Apple and Google have operating systems that translate taps into instructions on touchscreens. Amazon, Google, and other companies can sell far-field microphones embedded with NLP software to provide voice.
Divorcing voice from the platform
But unlike touchscreens, voice has high barriers to standardization and understanding of intent that make it more difficult to divorce from a platform or OS. Alex Capecelatro, the CEO of Josh.ai, a company that builds a voice interface for custom integrators, points out that with voice, there are two layers of communication. The first is the actual words, and the second is the intent.
Alexa, open the Ouija board skill. Image courtesy of S. Higginbotham.
“When you’re dealing with apps, you have a dedicated destination you want to get to,” he said. “With voice, how do you prioritize words and voice commands? How does the system do the right thing and how does the user have control where a command goes?” In his example, asking a voice interface to turn off the light requires the interface to know what to do, but also what program to ask to do that. Today voice interfaces use integrations such as Amazon Skills to understand intent in some cases like knowing what light to turn off and in others, such as setting an alarm or asking a factual question, choosing its own source of information or action.
This is why Capecelatro looks at voice as a platform that’s inexorably tied to a digital assistant. For monetization, Capecelatro has focused on charging customers and end users a subscription fee, which he says they gladly pay.
I agree that voice is complicated, but is it a platform? Should it be one? If so, the monetization options are limited to selling hardware at low margins and making money on ads or data, much like TV makers do today. But with the role that we expect voice to play in our lives, accepting that every utterance could become fodder for demographic data or to get an ad when simply asking for the weather, provides a poor user experience. But it’s equally hard to pay for privacy when companies are providing voice platforms for the cost of a cheap speaker or for free as Google, Amazon and Apple do today.
I think heading into the downturn, we’re seeing a rightsizing around voice as a platform, and I hope we see companies focusing on building out high-quality digital assistants that they then monetize using a subscription fee. I’d also like to see voice standardized a bit and a separate company or two take on the role of playing the app store or integration library for all integrations. Google’s or Amazon’s voice assistant would have hooks into these libraries that consumers set up. So if I want to use my voice to control my oven, I just seek out the GE Voice integration that would work across digital assistants in this third-party store. This would make it easier for consumers to switch platforms for their voice-enabled digital assistants, and provides a business opportunity that doesn’t infringe on privacy.
So let’s talk about digital assistants
Even if my consumer-friendly fantasies don’t come to pass, it has become clear that while voice is important, it’s also hard to get big money from it. But can companies get money from a high-quality digital assistant? I think the answer is an unequivocal yes. They have to realize what they are selling, however. It isn’t control over the smart home. It’s an understanding of what’s happening in a home or in a person’s life and providing the right help when needed. A digital assistant doesn’t even need to be as good as the lifelong admin who surreptitiously makes life easier for his boss.
It does need more than voice commands though. It needs context. That context should derive from where a person is in terms of location (work, school, home, car) and where they are within those locations (bathroom, bedroom, boardroom). A digital assistant also needs to understand the purpose of those locations and common elements such as lighting, temperature etc. This means any digital assistant will require access to sensors in those places (something Matter will help democratize).
An assistant will also need context about a person’s relationships and life, which means access to their preferences (entertainment, food, etc.) and access to their own digital productivity software. This is a tall order, and it is unlikely that one entity will control all of these. Google and Apple have good options because they have smart phones, but there is also a role for entertainment platforms and even companies such as Yelp or services such as Life 360 (which acquired Tile this year).
When combined with a digital assistant, information from all of these different services will lead to the assistant having insight and taking action on behalf of the user. We’re not there yet, but it is a valuable service and one that people will pay for. To get there, Amazon and others have had to spend big on better AI. So far, what we’ve seen is that Amazon has been spending on putting sensors in more places and trying to convince people that the services provided by its Alexa AI are worth paying for.
The Halo Rise lamp, which retails for $139.99. Image courtesy of Amazon.
An example is the newly released Amazon Halo Rise lamp, which is a sunrise lamp, sleep tracker and alarm clock that sits on a bedside table. It doesn’t have a mic or speaker, so you can’t talk to it like you talk to an Echo, but you can use Alexa to control it, and Alexa can take the information from the device to derive insights. One insight is using the sleep tracker function on the lamp to set the optimal wake-up time.
But to get this, you have to pay for Amazon’s Halo subscription which costs $3.99 a month. In this way, Amazon is seeding the home with sensors and services that could generate money. It has also spent quite a bit to develop this, and it’s unclear if consumers want to spend on Alexa in all devices, as opposed to buying devices that Alexa can pull information from.
Pulling it all together
If this is why Amazon finds itself losing huge sums of money, then it probably makes sense to pull back. It’s no secret that Amazon started Alexa with undefined goals in an attempt to own some kind of up-and-coming platform. Charlie Kindel, who was the head of Amazon’s smart home efforts from 2014 until he left in 2018, told me that in the early years of Alexa he pitched Jeff Bezos, then Amazon’s CEO, on getting a team of 50. He was told that he was thinking too small.
“When I started the smart home effort I had seven people to start with and stole from other teams and g got to about 50-60 by the end of the year,” Kindel says. “He [Bezos] said you’re not thinking big enough. Within the first year, I had 150 to 200 people working on the smart home.” Kindel says the idea was to establish a beachhead in the next frontier of computing.
This is why he’s not worried that Amazon is pulling back now. He says it probably makes sense, especially as we head into a period of economic uncertainty and it’s unclear how to monetize Alexa. So as we look at Amazon’s Alexa layoffs, I don’t think it reflects a bet against voice or a bet against the smart home. It’s an indication that we need to separate voice as a user interface from digital assistants and figure out how to give digital assistants the context they need to become something people will pay for.