Amazon Deepens Its Platforms in IoT, TV, and Gaming with New Hardware, Silicon, AI Features, and Services

Ahead of its 48-hour Prime Day shopping extravaganza, Amazon held an invitation-only press event where it showed off a seemingly endless array of new Echo, Ring, and Fire TV products, capped with the launch of a new cloud gaming service. A home surveillance drone got the press’ attention, but the overall theme was of Amazon deepening its platforms – Alexa, Fire TV, AWS – and extending them throughout the home, to the car, and the neighborhood beyond.

Amazon’s events have the highest product-per-minute announcement cadence, and that can make covering them somewhat overwhelming. However, the actual number of new products was “only” around a dozen, and, with the exception of the Luna cloud gaming service, all are updates or line extensions.

New Echos, New AI

The Echo Show 10” has a brushless motor that allows the display to rotate to follow the user around the room. This takes what had been the Facebook Portal’s signature feature and applies it to a much more versatile product. However, Facebook’s updated Portals now do the follow-me camera trick in software – though they can’t literally rotate to the opposite side of the kitchen island – and the $279 Portal+ has a larger display. Amazon has listed the Echo Show 10 as “coming soon,” which means that it missed Prime Day, but should be available before Christmas.

All the other Echos are now spherical and look like fabric covered melons (Echo, $99), grapefruit (Echo Dot $49, Echo Dot with Clock $59), or adorable animals (Echo Dot Kids Edition, $59). The shape gives Amazon’s engineers more room for better quality audio, but the overall effect is that the Echo now looks like a small sculpture or design accent, not a tech object. The new Echos should be extremely responsive thanks to new silicon that handles more processes on-device rather than first sending them to the cloud (see below). These Echos will ship on October 22.

The new Echos should sell well, but there are plenty of smart speakers on the market, including some that are nearly as décor-friendly from Sonos and IKEA and a new direct competitor from Google. Amazon’s advances in AI are far more consequential. The world’s top tech companies are all pushing forward in AI, but Amazon has been a leader in tricky areas like natural conversation, understanding garbled, accented, and children’s speech, and helping developers integrate voice control into third party devices. Amazon’s latest improvements are in the area of “teachable AI” and “natural turn taking.” Amazon is building in structures so that Alexa can learn why its response was so remarkably unhelpful and adjust its replies accordingly. Next, Amazon is building on Alexa’s ability to listen after accepting an initial command to participate in extended, multi-party conversation. Syntax and command order frequently trips up Alexa today, so there are many obstacles to navigate through before Alexa can interact seamlessly with humans. We are a long way from an AI like C-3PO, but never tell Amazon the odds.

Amazon is also adding more concrete features to the Echo, including Netflix, book reading for children, more group calling options, remote check-in, a new home security monitoring service, and a Sidewalk hub. Skype group calling was already supported, with Zoom and Amazon Chime coming. A new Care Hub in Alexa allows family members to remotely manage and check in on elderly or disabled relatives with activity alerts. Amazon is also providing developers with new APIs, Bluetooth LE Mesh connection options, local smart home skills for reduced latency, and new management tools.

For a couple of years, the Echo has been able to listen for sounds of broken glass or smoke alarms and alert your phone (“Alexa Guard”), but Amazon is betting that consumers are willing to pay a subscription fee for more capabilities and hand-holding. Guard Plus costs $5/month or $50 annually and includes connection to trained agents, identify more sounds while you’re away, and sound a siren from Echo devices.

Finally, the new Echo and Echo Show 10 contain routers for Amazon’s upcoming Sidewalk network, first announced at last year’s event. This mid-range network is a bit like if everyone in your neighborhood turned on long-range cordless phones, and then allowed Amazon to use them to create a supplemental network for exterior lighting, sensors, and trackers. While there are undeniably privacy implications to Sidewalk – like any shared mesh network – if it works it will be a huge coup for Amazon to extend its ecosystem outside the home without relying on cellular carriers.

MediaTek MT8512 with Amazon AZ1 Neural Edge Processor

Amazon Silicon?

Amazon announced that the new Echos are powered by the AZ1 Neural Edge processor, silicon designed to speed up Alexa by hundreds of milliseconds per response. In our testing, Amazon already had a significant lead on Google Assistant for response speed, but those times are impacted by network conditions (upload speeds) and latency. The AZ1 allows Amazon to do more speech recognition on the device itself, though it will still require a network connection and a fair amount of RAM, which means that the biggest benefits will accrue to Amazon’s more expensive devices, like the Echo and Echo Show 10.

Building your own silicon is all the rage in the tech industry because it has the potential to confer real competitive differentiation. (It can also lower costs, though only in large volumes, and even then, R&D costs can offset those gains.) Apple uses Arm instruction sets but does all the SoC design for its phones, tablets, and upcoming Macs. Microsoft has designed silicon for its HoloLens AR headsets and worked with Qualcomm to modify processors for the Surface Pro X line.

The AZ1 falls somewhere in between these extremes, though it is impossible to know exactly where. I have reached out to Amazon and MediaTek, and have concluded that Amazon wants it to be unclear just what this technology does, and how much is proprietary to Amazon. MediaTek has quietly become an IoT powerhouse, with its MT85xx series chipsets powering smart speakers and IoT devices from Amazon, Sony, Sonos, and many, many others. The AZ1 appears to be a neural processing unit that has been incorporated into MediaTek’s 8512, which features a 2GHz dual-core CPU, ultra-high-quality audio processing, Bluetooth 5.0 and dual-band Wi-Fi 5. While this may not be fully Amazon silicon, it should improve Alexa and gives MediaTek a deeper relationship with a key customer.

Fire TV

Amazon announced a pair of Fire TV stick updates. They are priced extremely aggressively because they drive engagement with Amazon Prime TV, which in turn improves Amazon Prime retention rates, and Amazon Prime members buy more stuff on Amazon. This is the circle that drives all of Amazon’s digital ecosystem products – see Luna, below.

There are three interesting things about the new Fire TV Sticks:

Amazon is including both Dolby Vision and Dolby Atmos for $40, putting pressure on Roku, Google, and Apple.
This category is so price-driven that Amazon felt the need to sell a stripped-down version, the Fire TV Stick Lite, for $30.
Amazon is debuting a new Fire TV user interface with these products, which will later be available for the rest of the Fire TV line. The main menu has been tweaked, and up to six user profiles can be created to make the Fire TV more family-friendly. (This report will be updated once we get experience with the new software.)

Eero WiFi Routers and ISP Services

Amazon purchased eero last year, and the user-friendly consumer mesh networking product line was due for a WiFi 6 update. That is exactly what we are getting in the eero Pro 6 and eero 6. Pricing starts at a reasonable $129, which is good because most consumers will be buying bundles with multiple modules. Ships November 2.

Eero has been white labeling its routers for a while, but is now starting to push deeper into value added services for ISPs with the Eero for Service Providers program. The idea is straightforward: most consumers, especially outside the U.S., don’t buy, install, and manage their own routers. ISPs can source basic in-home router technology easily, but have a much harder time writing software that understands what devices are in use, how to manage them, and how to easily provide additional services that consumers can understand and might be willing to pay a premium for. This is the market that Plume and SoftatHome are in, and Eero could be a formidable competitor, with AWS integration a potential selling point for ISPs down the road.

Ring

Amazon has at least four separate video recording/home security brands, but Ring gets the most attention thanks to its controversial focus on neighborhood watch features and interaction with law enforcement. Some of the recent additions should be welcomed by anyone: end-to-end video encryption is coming. Others could have additional privacy issues, like the new line of Ring car security products – Amazon appears to be getting into the dashcam business. But the most exciting – or terrifying, depending on your point of view – is the Ring Always Home Cam, a $249 home security drone shipping next year.

Ring Always Home is an unobtrusive box that does nothing while you are at home and houses a small drone with a camera that rises up to fly around a single level of a home while you are away. The drone’s camera is blocked when docked. It typically flies a route that you have programmed in advance, but it can be remotely triggered or manually controlled from a smartphone. Amazon emphasizes that the drone is noisy; it is not designed to sneak up on people who happen to be home when they shouldn’t be. (Undoubtedly, this will lead to a whole category of videos released by consumers who do manage to catch burglars, or, more likely, teenagers. And pets, who may see the Ring Always Home as a challenge to swat.)

Aside from privacy concerns (more below), Ring Always Home offers questionable value compared to putting cheap Ring Indoor Cams – or even cheaper Amazon Blink Minis – around the home. It is also launching during a pandemic when everyone is home all the time, which could limit its initial appeal to people with second homes. It is also undeniably cool, and requires essentially zero installation.

Tech Press Narrative: Privacy Concerns

Amazon’s IoT products invite privacy concern. They are based on always-listening microphones placed around the home, and sometimes include cameras that are, at least potentially, always recording. Now those cameras are not only sitting on a table or on your doorpost, but also swivel, drive, or fly. Amazon understands this and has made it easier to automatically delete data it is collecting, has put physical or digital privacy controls on all of its Echos, and is implementing encryption for video. Still, the fact remains that for these products to work, Amazon needs consumers to acquiesce to constant surveillance and data mining.

Amazon understands this, is steadily improving its products and policies, and is willing to engage in dialog to better address concerns. However, some of the responses that its products generate are being generated from a maximalist position – all surveillance and monitoring is bad – that does not reflect consumers’ desire for the benefits that these products provide. The furor over the Ring Always Home is particularly egregious. While it is true that Ring Always Home is extremely reminiscent of dystopian science fiction, the fact is that this is an indoor product, purchased by the homeowner, that is less invasive than regular cameras thanks to the lens being physically blocked when the drone is docked.

One More Thing: Amazon Crams A Full Cloud Gaming Launch In Five Minutes

Amazon is the biggest cloud service provider in the world, owns gaming video and community site Twitch, and loves subscription services, so it was only a matter of time before it launched a streaming gaming service. The fact that the new service, Luna, got about five minutes at the end of a series of other product and service launches is not an indication of indifference – Amazon seems to launch everything this way – but it is abundantly clear that Amazon’s foray into gaming is just one piece of a larger platforms and services story.

That is not a bad thing. If Google’s Stadia does not make money or drive advertising revenue, it will be cancelled. Amazon would certainly like Luna to be independently profitable, but it could also be used to raise engagement with Amazon Prime, which then drives Amazon retail sales. Amazon’s pockets are deep and patient, Amazon owns the cloud infrastructure that powers Luna, and Amazon can promote direct gameplay on Twitch. All these give Luna excellent odds of long-term success, even if other services are more popular due to content, community, or ties to specific hardware platforms (ex: Xbox).

The value proposition to the consumer is simple: Luna is inexpensive, bundling different game genres/publishers together in channels starting at $5.99/month. They can be played on a variety of devices – notably, Amazon is planning iOS web app support, which Microsoft currently lacks – in up to two places at once, and with some games in 4K. Amazon is claiming that it offers faster start times and lower latency than rival services.

Luna can work on a PC with a keyboard and mouse or a Bluetooth game controller; Amazon is also launching a dedicated $50 Controller with “Cloud Direct” (built-in WiFi) technology. Techsponential will be doing a deeper dive into game streaming in the future.

To discuss the full implications of this report on your business, product, or investment strategies, contact Techsponential