KEY POINTS

  • Amazon has introduced an entirely new device category with its recently released product called the Echo — a tubular speaker that acts as a hands-free voice-automated personal assistant for the home.
  • The Echo is deeply integrated with Amazon's loyalty program, Amazon Prime. The Echo retails for $99 to Prime members and $199 to non-Prime members, but purchasers must sign up to a wait-list, and sales are invite-only. For now, demand seems to be outstripping supply.
  • We tested the Echo's performance, looking at the quality of the hardware, the accuracy of the voice-command processing, and the associated app's features. We paid special attention to how well e-commerce has been integrated into the device. We found that the Echo performs well as a voice-activated music player and for very basic internet search queries, but it still has a long way to go before it can be effective for shopping or as a full-fledged digital assistant. It is also too dependent on the companion smartphone app for many functions. 
  • The Echo allows users to buy songs from Amazon Prime Music through voice command without switching to a smartphone or another device to complete the purchase. This feature points to a possible future for Echo as a full-fledged voice-powered shopping device. 
  • We think the Echo's full potential could be unlocked if Amazon improves e-commerce integration and opens the Echo to a wider variety of third-party apps. The Echo's voice-purchasing feature, which allows users to initiate Amazon purchases with simple voice commands, points to wider e-commerce tie-ins.

Introduction

The Echo can best be thought of as a voice-automated personal assistant — think Apple's Siri or Google's Google Now — but in hands-free speaker form. Instead of holding the "Home" button to prompt the voice assistant to turn on, users say the device's name, "Alexa," followed by their request or query.

Amazon EchoBI Intelligence

The Echo retails for $99 to Amazon Prime Members and $199 to non-Prime Members. At this price, any non-Prime members interested in the Echo will have a strong incentive to buy Prime along with the speaker, so they can [...]