Reference no: EM133376800

BATTLE OF THE TITANS: AMAZON ECHO VERSUS GOOGLE HOME(AND DON'T FORGET ABOUT APPLE)

A major battleground for the tech giants is being fought over smart home devices. Amazon's Echo was the first to hit the market in 2014. The smart speaker responds to voice commands and serves an ever-growing range of purposes, such as music streaming, news updates, Internet searches for information, grocery lists, joke telling, takeout orders from local restaurants, and answers to general questions. Furthermore, in keeping with the trend of Internet of Things (IoT), in homes with other smart features, Echo and its voice personification Alexa allow users to control compatible lights, fans, thermostats, garage doors, sprinklers, and locks with simple voice commands. Alexa can even call or send texts to the contacts in users' linked smartphones through Echo. With its earlier entrance, Amazon also has a leg up on the competition with approximately 70 percent market share.

Google's competing Google Home device did not even hit the shelves until April 2017. In some ways, Google Home is more advanced and "smarter" than Echo. For example, its web browsing capabilities are more advanced because it relies on Google's stellar search engine, whereas Echo is limited to Wikipedia and Bing. Google Home also can sync its audio playback with other devices and Google Cast speakers, providing better playback and the option to insert linked devices throughout the house, such that even customers with big homes can engage in constant interactions with the central device. If a user moves from the downstairs family room, where a Google Home device is playing music, to the upstairs bedroom, as long as there is another device there, those elements sync and the user does not miss a beat of the song. Overall, though, the two devices have similar functionalities, with some notable differences in the quality of the services they provide. Perhaps the biggest difference is how "smart" the devices really are when it comes to responding to users' requests. In a study conducted by the digital agency 360i, Google Home was six times more likely to answer requests correctly than was Echo. In this study, the researchers asked each device a series of 3,000 questions. Although they did not publish the questions they asked, the superiority of Google Home likely stems from Google's access to its advanced search engine. In addition, Google Home recognizes more colloquial command words. For example, if a consumer asks Google Home what movies are playing at the nearby theater, and then asks how long it will take to get "there," Google Home understands that "there" refers to the theater, whereas Echo would need the user to cite the specific theater name or location.

Yet Amazon's device takes the lead in IoT. Regardless of which brand of smart device people use in their homes to control things like lights or appliances, Echo is more helpful to control those operations. Furthermore, when it comes to e-commerce, Google cannot come close to comparing with Amazon for product searches or purchases. The vast customer insights maintained by Amazon help it power Echo, such that it is much better at enabling consumers to search for, find, and purchase the precise products they want at the very moment they realize they need something.

Another hurdle in the market stems from customers' privacy concerns. Such smart devices are always on and listening for commands. Some customers are uneasy with the presence of a device that is always listening to them. Although the companies offer assurances that customers are not being recorded if they are not directly giving commands and it is possible to disable the microphone and delete past 70 commands, customers remain wary.

As the first to market, Amazon was able to set the price relatively high at about $180. Offshoots of the original Echo abound, with prices consistently dropping. The Echo Show 8 sells for about $90, Echo Flex is about $20, Echo Auto is about $30, Echo Dot is about $40, and Echo Dot Kids Edition is about $60. Echo Show 8 is also bundled and sold with the Ring Video Doorbell Pro for about $289.

When Google entered, it priced Google Home at $130, but it currently sells for about $100. Like Echo, Google now offers several models including the Google Home Mini and Google Nest Mini, both for about $30, the Google Nest Hub for about $80, the Google Nest Hub Max for about $200, and the Google Home Max for about $250.

Even as this seeming head-to-head competition persists and intensifies, some other tech companies have ventured onto the battlefield. Apple introduced its smart speaker home device, HomePod, in January 2018. Along with some of the functions provided by Google Home and Echo, Apple's entry features a special focus on music and sound quality. Even its name is evocative of the revolutionary iPod, which changed the way people listen to music. Originally priced around $349, it is now available for about $200, which is still a relatively high priced option. But for devoted Apple customers, a high price tag rarely turns the tide.

Question:

Which device features examined in this chapter might have the greatest impact on consumers' propensity to buy one of these products?