Amazon introduced the Amazon Echo Look today. There's been a lot of coverage so I'll stay away from a review of the specs and discuss what I see in the bigger picture:
- Expect 'Sensor'ization. As I wrote about in Digital Destiny, we are moving into the next era of tech transformation. This transformation extends digitization beyond devices and towards everyday objects. As part of this transformation we are driving sensors into everything being digitized and are thereby unleashing a tsunami of data no digitally available. Adding microphones (and thereby enabling speech recognition) to a wireless speaker, as the original Amazon Echo did, aligns perfectly with what I wrote about in Digital Destiny. Coming back and adding a camera, a second sensor after the microphone, to this device is exactly what I wrote about. Moreover, driving more freshly digitized objects and newly digitized devices into additional spaces (ie new rooms of the house) is consistent with the explosion of digital objects I expect.
- The Bedroom: Amazon appears to be positioning the product for the bedroom. That probably tells us one of two things - either lots of consumers are placing Alexa in the bedroom and Amazon wants to take advantage of that and create new use-case scenarios or few consumers are placing these in the bedroom and Amazon sees it as the next place to go. Roughly 67 percent of U.S. households have broadband and there is little indication that is going to rise. In fact, it has even come down recently as households have moved to cellphone-only households. This suggests to me that, at least until 5G is a mass reality, the total addressable market (TAM) for these devices is about 60 or so percent of total households.Density rates are another story. Household density rates, the number of units of a given device in each household, are probably still relatively low. Ownership rates are low (thought growing) and the number of units per owning household isn't much above one per household. But my own personal experience suggests density rates for voice-activated digital assistants will increase significantly. I have them in multiple rooms and use them each frequently. The kitchen, bedroom, and family room all make sense to me. I won't be surprised when we see an all-weather model that could live on the deck. Creating use-case scenarios unique to these spaces is a natural way of driving adoption and density rates higher.
- Understanding Use-case Scenarios: The early use-case scenario for the Echo Look is full-length photos, but I wouldn't count out other use-case scenarios. The Echo Look is akin to a connected webcam in many ways and one could easily envision a social network layering on top of this - enabling you to connect with your friends live while you figure out what to wear on that ever-important first date. New sensors create new use-case scenarios and we've only gotten a look at one potential use-case scenario so far. I would imagine more use-case scenarios aren't fare behind and most of these will be driven by users experimenting with the devices.
- Doubling Down on Apparel: As I wrote about recently, Amazon is the biggest apparel retailer online and one of the biggest apparel retailers in the country. They've just positioned the Echo Look squarely in the apparel space.
- Service Boom: The product positioning, if successful, has incredible potential to drive services like Stitch Fix that curate apparel for consumers. With a catalog of what you have and what you like, machine learning will take care of the rest.
- Estimating Demand: Amazon is making the product available by invitation only. By doing this they have essentially created their own kickstarter campaign for a single product. They can gauge demand, and set production, by examining how many people request an invite. They should be able to also see how many of those individuals have a Alexa-enabled device already. They also get to decide who gets the first Echo Looks. Will it be the people who are the heaviest users of Alexa today? Or will it be those who spend the most on Amazon or buy the most apparel? Whatever the deciding factors, I hope I'm early on the list!