Amazon’s SVP for Devices and Services Candidly Talks About Amazon’s Devices Strategy

Amazon Echo

David Limp, senior vice president at Amazon for devices and services, has been rather candid in recent interviews about Amazon’s devices strategy.

First up, a summary at The New York Times on Amazon’s long term goals with Alexa:

It wants the Alexa Voice Service, which powers Echo, to be an ingredient in devices around the home and beyond, even if they aren’t made by Amazon. (…)

Over 10,000 developers have registered to integrate Alexa into their products, Amazon said. It won’t say how many Echo units it has sold, except to say that millions of devices with Alexa in them have been purchased. (…)

In an interview this spring, David Limp, Amazon’s senior vice president for devices, said that the company wanted there to be as many Alexa-linked “endpoints” around the home as possible and that Amazon did not really care who made those devices.

A few days ago, Fortune published the full transcript of an interview with David Limp, which I highly recommend to read. Here are some excerpts:

The device business is less about building hardware for customers and more about building services behind that hardware. (…)

And as we’ve rolled out devices since then, everything from Fire TV to, as you mentioned, Echo and Alexa and everything in between, it’s about creating that backend service that constantly improves and adds value for customers, and isn’t just a gadget but instead a full end to end service that can benefit what customers want. (…)

This is a very clear articulation of what Amazon wants to achieve. Alexa is a cloud based backend platform.

This leads directly to devices (end-points to that platform) being sold at cost:

What we’re trying to do is build a business model where we sell our products—the hardware side of the products—effectively at cost.

Really fascinating is the pragmatism of Amazon which even comes through in naming the consumer-facing assistant/interface:

[I]f any of you have Echoes, you know that it only wakes up when it hears the word Alexa, and the phonics of that word and how that word is parsed and the fact that it has a hard consonant with the X in it, is important in making sure that it wakes up only when it’s asked for.

The back-end play is also true for the Dash Buttons, mere low-tech end-points for the larger Dash Replenishment Service system:

This is a path to a future, though. The future is the backend service behind these Dash buttons, which we call Dash replenishment service, which is we envision a world—and again very soon—where devices all around your house will be connected and replenish themselves.

This infusion strategy is going to define the next decade for Amazon at the consumer facing level. (At the B2B level it is going to be the evolution of the marketplace and Amazon’s expansion into logistics.)

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