Amazon and Google battle for control of the living room

Among the monstrous number of announcements to come out of CES this week a major battle is emerging in the smart home arena.

The potential of IoT has never been in question, though the role of smart homes is one which is yet to wow the mass market. The idea is great, but market penetration has been slow. IoT light bulbs, or smart fridges have been around for quite a while, but uptake has not been exceptional. With the introduction of personal assistants as part of the smart home hub, the tide is slowly beginning to turn however.

Amazon made a strong claim to be winning the PR battle with this week with its Alexa artificial intelligence proposition. Aside from its own branded products, for example the Amazon Echo or the Amazon Dot, this years’ CES has seen the eCommerce heavy-weight partner with numerous brands to integrate the AI system into third-party products. Lenovo has developed its own smart speaker systems which includes the Alexa AI system, and Intel did the same thing with its Smart Home hub before Christmas.

While this has been a positive couple of weeks for Amazon, Google is never too far away. The Google Assistant is making its way to Android TV and Nvidia has launched Spot, a smart home device, which integrates the Google Assistant as opposed to building its own AI system. Apple has been very quiet during the conference, but that is hardly unusual, as such events are far too common place for the high-horsed brand, but you can probably expect a Siri update in the next couple of weeks.

The initial battle for each of the brands is not only to get their own AI system into the consumer’s home, but also to prove it is actually useful. AI maybe gaining credibility, though there will still be many people around the world who will struggle to trust a computer. Proving the AI is competent, secure and useful is arguably the more important battle than that of the physical devices due to the nature of product lifecycles.

When you buy a smart home hub currently, you buy the AI system which comes with it. But it won’t be long before you can buy an empty shell and select the AI system of your choice. This is the most important aspect of the smart home. Once you have the AI into an individual’s living room, you also the gateway into that person’s life and subsequently the revenues which can be derived from it.

Controlling the information gateway will be one of the most important battles of the consumer IoT war.

The battle for IoT revenues will be based on the same business model that internet companies have used for years: prove a proposition is useful to the consumer and then monetize it afterwards. Making this model work can prove difficult and expensive, but the long-terms gains can be incredible. Just ask Mark Zuckerberg.

There are numerous social media sites currently, though Facebook is widely recognized as the most successful in the western world. Facebook has arguably become one of the most important websites for the majority of millennials. It’s where they communicate with friends, it’s where photos are stored, it’s how they find out about milestones in other people’s lives and for some it’s where they find their news.

Now think back to when you first signed up to Facebook, how many adverts were there? Not many right? Zuckerberg lured us into his online world, and once he controlled a single gateway to hundreds of millions of consumers, he hit the heavy advertising button hard, creating one of the biggest marketing platform for brands around the world.

It’s the internet business model. Make something useful and valuable to as many people as possible for free and then monetize it; it’s the new way to do business. You can see gateways opening everywhere in the media world as well. Freezines and Free-newspapers are appearing at every train station, slowly expanding their own audiences for publishers to reclaim lost subscription revenues. YouTube advertising is becoming more advanced. Freemium apps and content production sites are now the norm. Data is the new currency, and you are the metric.

We’re unlikely to see anyone AI platform dominate the living room, though the potential for this market is significant. Brands are looking for new ways to engage customers and encourage buying decisions from the cash-conscious consumer, and in a world of multi-platform marketing, the smart home hub certainly adds another dimension.

How Amazon, Google and co. advance their own AI platforms will define the success of the smart home. Older generations may have a natural disposition to mistrust a computer with any important decisions, though this element of credibility will define the size of the audience which these gateways offer. The larger the audience, the more congested the bottle-neck, and therefore the greater the revenues gained through the turn style. It took Facebook a long-time to generate this credibility and the subsequent gateway, however the masses are more open to digital platforms nowadays.

Another area to consider is the purchasing power of the personal assistants. How long will it be before we trust computers to make purchasing decisions for us? Could you trust a computer to build your shopping list and schedule a time for a delivery to your home? With the introduction of smart fridges, and AI personal assistants which can access your diary, the idea is perfectly feasible in the near future, but will people trust Google to do their shopping? If yes, this could open up an entirely new segment.

Back in October, we spoke to Gregory Roekens, Future Technology Officer at advertising agency Grey about the role AI will have in future brand marketing campaigns. Roekens has been looking into how AI and other next generation technologies will impact consumer spending habits, and subsequently, how this will change the way brands communicate with the consumer.

If (or when) we get to a stage where AI personal assistants are trusted with purchasing decisions, how will brands communicate with and influence AI? How do you advertise to robots? Roekens highlighted that while AI is new, we all have a techno-trail already. We have all left our fingerprints in the digital world which allow marketers to understand and best pitch an idea to the AI. With machine learning components, you AI personal assistant should be personalized to you, and in theory an extension of your buying habits. In the future, it could in theory be making the same decisions as you.

Now it’s still a long way off, but it takes personalized advertising to a whole new level. Imagine if the brands start taking on AI as advertising solutions. AI will be pitching AI, and you won’t even need to be awake for it. That AI personal assistant extension of you will be switched on 24/7, and a target for brands all over the world.

This is why the battle for home could be one of the most important the technology companies have faced to date. Personalization is about to be taken to a new level, and brands could have access to consumers which has never been experienced before.

Like search engines or the smartphone or social media, those who get the smart home right could redefine their own organizations. Google nailed search engines and Yahoo didn’t; look what happened there. iOS and Android nailed smartphone operating systems and Windows didn’t; look what happened there. Facebook nailed social media and Myspace didn’t; look what happened there.

The battle for the living room gateway is just beginning, and it’ll be a good one.