Alexa as an operating system

On the blog Stratechery, a recent post discussed Alexa, the new digital assistant from Amazon. It talked through the business model that Amazon seems to be employing in order to promote this new line of service.

Alexa can take many forms, but the primary means to access this tool is through a standalone product known as the Echo. The blog noted some key developments:

• The physical device (the Echo) was simply a conduit for Alexa, Amazon’s new personal assistant. And critically, Alexa was a cloud service, the development of which Amazon is uniquely suited to in terms of culture, organizational structure, and experience.
• The Echo created its own market: a voice-based personal assistant in the home. Crucially, the home was the one place in the entire world where smartphones were not necessarily the most convenient device, or touch the easiest input method: more often than not your smartphone is charging, and talking to a device doesn’t carry the social baggage it might elsewhere.
• There was an ecosystem to assemble: more and more “smart” products, from lightbulbs to switches, were coming on the market, but nearly every company trying to be the centerpiece of the connected home was relying on the smartphone.

Why is this important? Well, the article had earlier discussed the vital importance of the operating system as a key driver of digital value (think Microsoft Windows).

• All kinds of hardware manufacturers are lining up to build Alexa-enabled devices, and will inevitably compete with each other to improve quality and lower prices.
• Even more devices and appliances are plugging into Alexa’s easy-to-use and flexible framework, creating the conditions for a moat: appliances are a lot more expensive than software, and much longer lasting, which means everyone who buys something that works with Alexa is much less likely to switch

That leaves the business model, and this is perhaps Amazon’s biggest advantage of all: Google doesn’t really have one for voice, and Apple is for now paying an iPhone and Apple Watch strategy tax; should it build a Siri-device in the future it will likely include a healthy significant profit margin.

Amazon, meanwhile, doesn’t need to make a dime on Alexa, at least not directly: the vast majority of purchases are initiated at home; today that may mean creating a shopping list, but in the future it will mean ordering things for delivery, and for Prime customers the future is already here. Alexa just makes it that much easier, furthering Amazon’s goal of being the logistics provider — and tax collector — for basically everyone and everything.

Here is the link to the full article:  Stratechery: Amazon's operating system Alexa

The Apple approach to innovation

Vox has an article talking about the release yesterday of the Touch Bar for Apple MacBook Pro laptops. It's a significant advance. They explain why it succeeded for Apple despite the fact that this particular innovation had been tried before by other manufacturers but failed.

Apple controls its products tightly. This approach allows it to approach innovation very differently:

In contrast, Apple controls the entire “stack” for its products. It manufactures the hardware, writes a lot of the software, and even makes some of its own chips. This makes it hard to achieve a large market share, since it’s difficult for one company to serve a lot of different kinds of customers. But the example of the Touch Bar shows that the Apple approach still has some distinct advantages.

It’s hard to imagine anyone other than Apple successfully pulling off an ambitious innovation like the Touch Bar because it requires simultaneous investments on both the hardware and software sides of the business.

Apple’s ability to make dramatic changes to its platforms has been an important source of strength for the company. And it’s a big reason that two of Apple’s chief competitors — Google and Microsoft — have increasingly aped Apple’s business model in recent years.

Here is more on why Apple can lead far more successfully than its competitors despite having much less market share:

A feature like Touch Bar or Adaptive Keyboard is only going to succeed if it becomes a platform-wide standard. And on a decentralized platform like Windows, that creates a chicken-and-egg problem: Applications developers are only going to put in the effort to support it if it’s available on a lot of laptops. But laptop makers are only going to offer it if there’s a lot of application support.

This is a particularly severe problem in the Windows PC world precisely because the PC market is so competitive. The hardware for the Touch Bar is apparently expensive — Apple is charging $300 extra for the cheapest MacBook Pro with a Touch Bar compared with the entry-level MacBook Pro without it.

So if a PC maker added a Touch Bar to its laptops, it would be taking a big risk of getting undercut by competitors that skipped the Touch Bar and charged significantly less. This is probably one reason Lenovo’s adaptive keyboard was so much less impressive than the Touch Bar — the Chinese company couldn’t spend a lot on the feature and risk being priced out of the market.

Apple can guarantee that a significant percentage of their products will contain the new innovation. This allows the software makers to design products with the confidence that there will be a ready market for their work once the new innovation is finally released.

This model has been so successful for Apple that Microsoft and Google are now openly copying it. They have both ventured into producing their own hardware (Surface, Chromebooks, and the Pixel). All of this will likely lead to even more innovation in the years to come.

Here is a link to the original article:  http://www.vox.com/new-money/2016/10/27/13441068/touch-bar-apple-google

It's the little things

Original post:  Nov 27, 2013

Tiny details can make a difference.

I was reading an article talking about the demise of the OS/2 system. This was meant to be IBM's answer to Microsoft (Windows). IBM dedicated massive amounts of resources to create a fairly robust operating system. Even with their might, they were ultimately unable to defeat their smaller, more nimble competitor.

Even their marketing campaign was unable to avoid fairly critical errors. At some point along the way, they settled on a name for their system, "Warp." They certainly meant to invoke the Star Trek version of travel faster than the speed of light. They were so confident that this wonderful name would capture the public's imagination that they printed the release materials and launch packaging. Unfortunately, no one cleared that with the copyright owners. Once they were unable to secure the rights to use that meaning in their campaign, they were forced to learn the other meaning of the word.

These little lessons are reminders that it's often the small items that determine the fate of very large enterprises.

Here is a link to the OS/2 article:  Half an operating system: The triumph and tragedy of OS/2 | Ars Technica