Mary Meeker of KPCB devoted more than 10% of her widely followed Internet Trends 2016 report to voice computing interfaces. In the 2015 report, voice assistants didn’t merit a single mention. What changed? Meeker pointed out that four million Amazon Echo units have shipped since launch and sales are hitting a nice growth curve. Data show that unit sales were one million in the first quarter of 2016 and expected to at least maintain that rate through the balance of the year. The Information reported separately that internal Amazon forecasts expect another 10 million units sold in 2017.
While Meeker mentioned voice services from Apple, Google, Microsoft, and Soundhound, the star of the show was the Echo driven by Amazon’s Alexa. Alexa represents a game changing voice experience that has even enchanted Tim O’Reilly:
“Alexa has done so many things right that everyone else has missed that it is, to my mind, the first winning product of the conversational era.”
-Tim O’Reilly, CEO O’Reilly Media | What Would Alexa Do?
The popularity of Echo and Alexa took the industry by surprise. Meeker decided to compare Echo adoption to iPhone sales in its first few quarters after launch and added this insight:
“In the computing industry, inflection points are typically only obvious with hindsight. So ask the question – iPhone sales may have peaked in 2015 per most analyst estimates that are out there while Amazon Echo sales are just beginning to take off. Food for thought.”
-Mary Meeker, KPCB | Code Conference 2016
Why Alexa’s Reach is Bigger Than You Might Expect
Additional analysis beyond what Meeker presented reveals more than the obvious growth patterns represented by unit sales. When you compare Echo adoption to the original iPhone quarterly sales data and you consider that an Echo serves a household and not just an individual, the audience reach looks similar.
The U.S. Census reports an average of 2.58 people per household. This means that Alexa through the Echo has a current audience of about 10.7 million users and growth is increasing each quarter. By the end of 2017, Alexa is likely to be serving an audience of 40 million users. In addition, Alexa Voice Service (AVS) is enabling developers to add Alexa to their own devices and apps, which will expand this user base further. Alexa users go well beyond Echo unit sales. This is no longer a niche user base.
Comparing Alexa Adoption to the iPhone’s Early Days
The iPhone user base was 13 million six quarters after its initial launch – not much more than Alexa’s estimated 10.7 million users. More than half of the iPhones were sold in the sixth quarter with the introduction of the iPhone 3G. Since that time, iPhones have followed a predictable pattern of large unit sales volumes in the two quarters after a new product release and a drop off for the following two quarters. We don’t expect Echo sales to be as lumpy because its value is not as closely tied to the hardware as the iPhone. In fact, Alexa’s rapidly growing cloud-services knowledge base represents the key value for consumers because it improves continuously without requiring users to upgrade their hardware or download new software. What a revolutionary concept.
What Alexa User Growth Means for Brands
You can see why brands ranging from Patrón and Dominos to Capital One and Spotify want to have an Alexa presence. Consumers are already there and more are moving there each quarter. Alexa Skills, which enable brands and developers to offer customized voice experiences, have been growing exponentially just to catch up with consumer demand. There were only 14 Skills available last September. That number grew ten times by January of this year and another 10 times by early July. The number of Skills today exceeds 2,000.
Alexa can answer a lot of questions, but there are many she can’t answer yet. Alexa gets smarter with each new Skill so if you build a custom Alexa Skill you can provide consumers with an on-brand experience. Until then, consumers may get no response or something that is factual but not on-brand when they ask about your company, organization or product. (Learn About Custom Alexa Skills Here).
Why Voice is Emerging Now
Many consumers regularly complained about the voice assistants offered by leading mobile OS providers, but they seem to love Alexa. A lot of this has to do with the Echo’s advanced microphone technology and Alexa’s highly responsive user interface that was designed to be voice-first and voice-only. Earlier assistants like Siri often missed the syntax, context and intent of the spoken request completely. They also too often mixed a voice request with visual response instead of the more natural audible communication. Alexa excels in these areas and has set a new performance target for other voice assistants to reach for.
Mary Meeker provided some additional data that helps explain the Alexa phenomenon. Consumers are using voice computing more frequently for simple queries and this familiarity has set the stage for a true context and intent driven voice assistant like Alexa to gain rapid adoption.
Finally, Meeker points out that voice provides a lot of value. People can speak 150 words per minute compared to typing an average of only 40. It’s convenient, instant interaction that frees them from the keyboard and the screen. And, it is now personalized and context-driven.
However, Voice is Different
The trends all point to voice experiences becoming more commonplace based on consumer usage trends. The challenge that brands and organizations face today is that nearly all of digital communications with customers are optimized for visual consumption and touch interaction. The visual-plus-touch experience is very different than the voice-plus-audio experience. This complicates the technology transition. Despite the challenges, the fact remains that most brands have no presence on Alexa and are missing opportunities for consumer engagement.
The question is how brands and organizations will react to either take advantage of this change in consumer behavior or cede ground to competitors through inaction. It’s time for brands to start offering voice experiences and Alexa should be your first stop.
To learn more about what it takes to develop an on-brand voice experience and custom Alexa Skill, click the button below. Also, for a select number of companies XAPPmedia is building custom Alexa Skill demos free of charge. These demos enable marketers and agencies to experience what their brand experience can be for consumers on Alexa. Click the button below to learn more.
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