And in each case, there are financial implications to how the respective fights unfold in the coming years. However, when it comes to voice assistants, the story is a little complicated for Amazon, as the company explores its options for getting a bigger payoff for its giant investments in Alexa.
Much as they did in 2019, Amazon and Google have used CES to unveil a slew of new features and partnerships for Alexa and Google Assistant, as well as make fresh disclosures about their adoption. For its part, Amazon:
- Announced that "hundreds of millions of Alexa-enabled devices" have now been sold. That suggests the Alexa installed base may have doubled since January 2019, when Amazon reported 100 million-plus devices had been sold.
- Unveiled several moves meant to grow Alexa's automotive reach. These included expanded partnerships with mapping and navigation software firms, deals to integrate Alexa within Lamborghinis and startup Rivian's electric vehicles and plans to bring the Echo Auto speaker to international markets. Amazon also announced a service that will allow Alexa to be used to pay for gas at U.S. Exxon and Mobil stations.
- Teamed with OEMs to show off Alexa far-field voice compatibility for TV sets and sound systems. This allows Alexa to be engaged without the use of a remote.
- Announced that there are now over 500 million Google Assistant monthly active users (MAUs). The disclosure comes a year after Google said Assistant would be on one billion devices by the end of January 2019, and eight months after it disclosed Android, which often has Google Assistant built in, was installed on more than 2.5 billion active devices.
- Announced that Assistant will let you schedule actions for later, more easily access privacy settings, leave notes on smart displays and read webpages and articles aloud in 42 languages.
- Unveiled partnerships with TV makers to develop sets that allow Assistant to be engaged without the TV itself turning on.
Amazon's latest Alexa moves comes three weeks after The Information reported that Jeff Bezos' firm is getting more serious about trying to monetize Alexa, following several years of big R&D investments and sales of Echo devices that are often treated as loss leaders. It added that Amazon is "keeping a closer eye on costs" within the business unit responsible for Alexa.
Sources stated that the Alexa unit's headcount, which is now above 10,000, has stopped growing. They also said that Amazon has produced just $1.4 million in revenue from purchases tied to third-party Alexa skills over the first 10 months of 2019, and that the company is exploring new monetization options for Alexa, such as charging for premium news and entertainment services.
However, it's worth noting that there are a few other ways that Amazon potentially profits from Alexa usage. These include driving voice commerce transactions, driving AWS usage among Alexa developers and -- by having Alexa support features such as voice commerce, order updates and Prime Music playback -- using Alexa as one more tool for keeping consumers hooked on Amazon Prime.
All of this still probably isn't enough to recover the cost of having more than 10,000 Alexa-related employees in the near-term. But Amazon has never been a company that makes big investment decisions based on whether it gets a substantial payoff within a year or two. And over the long run, there should be large direct and indirect payoffs for controlling one of the world's three preeminent voice assistant platforms.
For Google, meanwhile, voice assistants represent both a threat and a revenue opportunity.
On one hand, there is some risk of voice commerce transactions and other voice assistant activity eating into traditional search activity that's monetized by ads. Some voice commerce fears do feel overblown, given that access to a display is quite useful for a lot of e-commerce and online marketing activity (and in some cases, 100% necessary). But given that search is by far Google's biggest revenue and profit source, ceding the voice assistant space to Alexa and Apple's (AAPL) Siri definitely wouldn't have been in the company's strategic interests.
At the same time, the fact that Google is able to integrate its voice assistant with both the world's most popular search engine and the world's biggest ad-supported video site (YouTube) gives it an easier path to monetizing its assistant, at least on smartphones and other devices featuring displays. Google Assistant has long made it easy to pull up YouTube videos, and last year, Google began showing ads within the search results that come up in response to certain Assistant queries on smartphones.
And given that voice assistants are serving to boost the total amount of search/querying activity that consumers engage in, there's a chance that CEO Sundar Pichai's prediction that voice assistant activity will be a net positive for Google will end up being right.