The virtual battle for the soul of the smart home

Google has made its move in the prolonged battle with Amazon for control of the smart home, but are the speakers a glamourous distraction from the real fight.

It has been a couple of months of back and forth. Whichever seems to release a new piece of hardware or update to the virtual assistant, it doesn’t seem to be long before there is a counter move from the opposition. It’s one of the longest games of ‘mine is bigger than yours’ we’ve seen in the tech space for a while.

But is it nothing more than an intriguing side-quest? Are there genuine ambitions to compete in the hardware game or is it a ploy to get the rest of the industry up to speed? We have a feeling victory in the smart home will be more on the software side than the hardware.

Let’s start with the hardware. Following a little spat with Amazon over how YouTube is displayed on the Echo Show, Google is set to bring out ‘Manhattan’, a similar product to the Echo Show in it being a smart home device with a screen. According to TechCrunch sources, Google has been working on the device in a secret lab somewhere with the intention of releasing it towards the end of this year, or the beginning of 2018.

But is this just a ruse to get the rest of the world up to speed? Neither Amazon or Google have heritage (or particularly successful heritage) in the hardware world, but without the introduction of Amazon Echo or the Google Home device there might not have been much momentum in this sub-sector. But now there is, as the rest of the industry start to bring out their own connected devices after seeing there is an appetite from the consumer.

Let’s be honest, Google and Amazon might pump a load of cash into hardware, but they probably won’t be able to compete with the established players in the electronics market once they are moving in the right direction. Would you rather buy a TV off Amazon or Samsung? A speaker off Google or Bose? The electronics brands have better reputations, and we have a feeling once the idea hits the mainstream markets, the general public will go with what they know.

But we don’t think that matters. Once the rest of the hardware space is making connected devices on a mass scale, this side-quest could be considered mission complete. It would allow Amazon and Google to concentrate on what they do best; software and services.

This is where the financial battle of the smart home will be won or lost. Who can get their virtual assistant into the most devices and manage the relationship with the consumer. An example of this is Google’s new partnerships with Nvidia and Sony. On the Nvidia Shield TV and Sony Bravia TVs, the virtual assistant and connected platform will be Google.

This means Google will manage the relationship with the consumer, and also the money which can be taken from it. Once the idea of having a virtual assistant has been normalised, the money will start streaming in. If you as Alexa to order you a pizza from the top-rated takeaway in your area, Amazon will probably be taking a cut of the cash. Or if you ask Google to add toothpaste to your shopping list and then to organize the delivery, it will take a slice of the action somewhere. Both will be facilitating the interaction between the consumer and third parties, and they won’t be doing it for free.

The one who has their virtual assistant in the most devices around the world will make the most cash. Yes, there will still be money to be made from the hardware products, but this is not the core competency of either of these businesses. Creating an audience behind a walled-garden and then monetizing access is a brilliant business model, and one few have been able to nail.

This is perhaps one of the reasons we are surprised Facebook hasn’t been making more promising strides in the virtual assistant world. This is a business model which is almost a carbon-copy of how the social media platform stormed to the top of the technology world. There are reports of Zuckerberg and his cronies working on their own assistant, but they are proving to be quite late to the game.

So yes, the battle of one-upmanship is proving to be an entertaining one, but let’s not forget about where these organizations traditionally make serious cash. Software is going to rule the world, and it won’t be very different here. The winner of the smart home will be the one with the best virtual assistant.