Tech Transformers

Amazon’s Alexa stole the show at CES in a bid to become the Internet of Things operating system

Luke MacGregor | Bloomberg | Getty Images
Amazon's Alexa steals the show at CES
Amazon's Alexa steals the show at CES

Amid internet-connected hairbrushes and jeans at this year's Consumer Electronics Show (CES) in Las Vegas, there was one big - but barely visible -winner: Amazon.

Alexa – Amazon's artificial intelligence (AI) voice assistant rival to Apple's Siri and Google Assistant – was everywhere. The U.S. e-commerce giant integrated Alexa with a number of devices and products including Ford cars, LG's new refrigerator, and Huawei's Mate 9 smartphone.

Previously, Alexa was only on Amazon's own Echo speaker and just a handful of devices. But Amazon's Alexa push is the company's attempt to become an operating system (OS) for the so-called Internet of Things (IoT), just as Google Android and Apple iOS have done with mobile.

Ford to offer Amazon Alexa in vehicles
Ford to offer Amazon Alexa in vehicles

"The latest generation of IoT appears to require (AI-driven) voice-led OS ," Neil Campling, head of global technology, mobile, telecom research at Northern Trust Capital Markets, wrote in a note on Friday.

"Whereas Apple's Siri seems more a function within iOS and OS X perhaps Amazon's Alexa offers the best opportunity to provide an IoT operating system."

OS for the IoT?

Amazon's push is significant because the company has struggled in the past with creating an ecosystem that can take on its rivals. Apple has customers locked into its iPhones and Macs while Microsoft dominated the PC space for years. Alphabet-owned Google meanwhile has a suite of software and services used by millions. But none of them have made a big move into the IoT like Amazon has so far.

"All those companies know voice is an important part of the future, but Amazon has spotted the opportunity, has executed well and has built an ecosystem strategy where they are building relationships so they can be bigger than Amazon could be alone," Ian Fogg, head of mobile at IHS Markit, told CNBC by phone.

"Amazon is saying we haven't got mobile, we failed there, we haven't got the PC space, we aren't in the web like Google, so we have to do something a bit different."

David VanderWaal, vice president of marketing for LG Electronics USA, left, and Michael George, vice president of Alexa, Echo, and Appstore at Inc., speak about the Amazon Alexa partnership with the LG InstaView Door-In-Door smart refrigerator
Patrick T. Fallon | Bloomberg | Getty Images

If Amazon can gain a strong foothold across devices, it could be huge for the company, given that the number of connected IoT devices and sensors are expected to reach over 46 billion in 2021, up 200 percent from last year, according to Juniper Research. A large market share could drive user's to Amazon's services across e-commerce and entertainment.

"If people have an Alexa-powered device in the home, buying things from Amazon is going to be one voice command away, which reduces friction and integrates Amazon even more into people's daily lives," Jan Dawson, chief analyst at Jackdaw Research, told CNBC by email on Thursday.

Alexa small-scale

But competition is already stiff in the AI voice assistant space. Google has recently refreshed its offering called Assistant, Apple is putting Siri across more devices such as its wireless AirPods, while Samsung last year acquired Viv, a voice assistant start-up from the makers of Siri, presumably to integrate into their own products.

Google has also been making big progress in the AI space, driven by the acquisition of London-based firm DeepMind in 2014. But analysts said that none of these companies have yet to really make a big impact, allowing to Amazon to take the lead. But the threat is always present. Amazon is also in the early stages and still does not have the scale of its rivals.

"It is worth noting that in all this, Apple's Siri is in two orders of magnitude more devices than Alexa, so we shouldn't get too carried away in terms of the scale and reach. Many of the devices being launched at CES won't sell in large numbers either," Dawson said.

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