With Echo, Amazon Builds a Wall Against Google

Amazon knows what people want, when they browse, and when they buy. Put that through enough big-data algorithms, and you can figure out America's unfulfilled retail desires.

America, apparently, wants a wide range of reasonably priced home assistant speakers.

That retail intelligence also explains why Amazon isn't repeating its Fire Phone debacle or making higher-end Fire tablets. It can tell that by and large, smartphone desires are being fulfilled, and that nobody really wants higher-end Android tablets. So it doesn't make them.

The new Echo lineup offers jumping-on points at every price level except the high end, and it counters many of the criticisms we had of last year's lineup. Was the Echo too grim-looking for a living-room centerpiece? Welcome the new fabric-covered model. Is the $230 Echo Show too expensive? Now we have the $130 Echo Spot.

Amazon can hit these prices because it's making at least some of its money through people using Echos to shop and through Echo users signing up for Prime and other Amazon services. By making its profits through services and data, not through hardware, Amazon is duplicating Google's smartphone strategy. And the Echo lineup looks designed to freeze out Google as a competitor, while leaving room for Apple.

Leaving Room for Apple

Amazon's Echo lineup leaves one big hole. It's focused on affordable smart assistants of various kinds; there's no smart, higher-end prestige or audiophile speaker.

You could argue that Amazon has left this area open for Alexa licensees, but I also think it leaves room for Apple. Apple's HomePod, at $349 and up, will aim for the higher-end Sonos crowd, following the Apple plan of making more profit off fewer units than its mass-market competitor does. Amazon doesn't have a problem with this, much as it doesn't have a problem with Apple's relatively costly iPad tablets competing with its cheap Fires.

Google and Microsoft end up frozen out of this market. Next week, we expect to see an affordable, attractive Google Assistant speaker that competes with the Echo Dot, but looks better. But especially with the better-looking fabric-covered Echo now out there, Google really hasn't been able to leverage its Android and search success into explaining why you should have Google always listening to you in your home, as well.

To some extent, I think that's the natural reaction of smart partners and consumers. When I talk to people, there's growing suspicion that Google and Facebook just have too much data on us now. Google knows everything you search for, everywhere you go on the web, and (if you have an Android phone) everywhere you go in person, too.

Amazon has a lot of data on us too, but its data is considered a little more benign; it's likely to be the things we're shopping for as opposed to our 3 a.m. worries of "is this infected?" (Yes, if you keep picking at it.) We're a little more willing to welcome Alexa into our homes than to give Google yet another eye or ear. If there isn't that much difference in functionally between Google's and Amazon's products, that makes a lot of difference.

And meanwhile, where is Microsoft? Cortana is appearing in speakers from HP and Harman Kardon, but just as with Windows Phone, Microsoft seems to be coming to this market with too little, too late, and too undifferentiated. Amazon has learned the lesson from its phone disaster. It doesn't look like Microsoft has.

This article originally appeared on PCMag.com.