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Steve Wozniak Believes That Inc. Owns the Next Big Platform

By Leo Sun – Mar 17, 2016 at 8:00AM

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The legendary Steve Wozniak just gave Amazon’s Echo a huge endorsement.

Back in 2012, Apple (AAPL 2.93%) co-founder Steve Wozniak expressed his disappointment in Siri. Speaking to the Albany Times Union, Wozniak declared that after Apple bought Siri, the virtual assistant went severely downhill. That's why it wasn't surprising when Wozniak recently told CNBC that's (AMZN 6.91%) Echo smart speaker, not Siri, was "the next big platform for the near future."

Amazon Echo. Source: Amazon.

"It's become such a wonderful part of our life, not having to lift anything up and speak to things, and just speak to it anywhere across a room," said Wozniak. "That is such a luxury and freedom." Wozniak was notably kinder to Siri this time, admitting that he also used Apple's voice assistant.

Is Woz right that the Echo will become the "next big platform" in computing? If so, how will that alter the balance of power between Apple's hardware-driven ecosystem and Amazon's cloud and e-commerce empire?

Siri by the numbers
In the four years since Apple launched Siri for the iPhone, the voice assistant has been integrated into the iPad, Apple Watch, Apple TV, and select CarPlay vehicles. Last September, Apple claimed that Siri processed a billion queries per week. The number sounds impressive, but it's not that meaningful compared with the 24.5 billion searches conducted weekly on Alphabet's (GOOG 6.83%) (GOOGL 6.81%) Google. Based on the 231 million iPhones sold in 2015, that would also just equal about four weekly Siri queries per "new" iPhone user.

However, the actual figure is likely even lower after usage on older iPhones, iPads, and other devices is factored in. An Intelligent Voice survey in late 2013 also found that 85% of iOS users had never used Siri. If that percentage hasn't improved much since then, we can assume that the majority of Siri's "1 billion" weekly queries are coming from a relatively small group of dedicated users.

Why Amazon's approach is disruptive
Whereas Siri, Google Now, or Microsoft's Cortana answer user queries while they're out and about, Amazon's Echo is designed to conquer homes. To use Siri, users must pick up an iOS device or the Apple TV's remote and press a button. The Echo, however, activates speech recognition once the user calls out "Alexa."

That little difference makes Echo an ideal choice for couch potatoes who don't want to get up or reach for their mobile devices. In ads, Amazon promotes the speaker as a helpful virtual family member that can play music, compile to-do lists, set alarms, stream podcasts, play audiobooks, buy previously purchased Amazon products, and provide real-time weather and traffic updates. In February, Amazon added the ability to order Domino's pizza and hail a ride from Uber.

Amazon's Tap (L) and Dot (R). Source: Amazon.

Since the Echo's price tag of $180 seems a bit steep for a Bluetooth speaker, Amazon recently launched two cheaper Echo devices -- the smaller $130 Tap and the $90 Dot, which transforms any old speaker into an Echo device.

When we combine these new devices with Amazon's Dash Buttons, its DRS-enabled appliances, the Alexa-enabled Fire TV, and the Kindle, the company's ultimate goal becomes clear: to dominate "smart homes" with the Echo and Fire TV acting as its central hubs. Amazon made that goal abundantly clear at CES this year, when it integrated Alexa with Ford vehicles to let drivers control house lights from the car or remotely start a car from indoors.

The "next big platform"
Since some of Echo's features, like reordering products, are only available to Prime members, the speakers also fuel the growth of the Prime ecosystem. Research firm CIRP recently claimed that Amazon's total U.S. Prime members rose 35% over the past year to 54 million, and the average Prime member spent $1,100 annually, compared to just $600 for non-members.

Slice Intelligence also recently claimed that the average Echo user bought three times as many products on Amazon compared to the regular shopper. It's unclear how may Echo speakers have been sold so far, but they'll likely be lifted by rising Prime membership numbers.

Apple and Google could lose
The spread of Echo speakers in homes could disrupt Apple's home automation plans for HomeKit, which tethers compatible smart home devices to Siri. While that option might be convenient for iOS and Apple TV users, the same users could be pulled into Amazon's orbit with Prime offers, Echo speakers, and DRS-enabled devices.

It could also be hard for Google, which is trying to build a smart home ecosystem centered around its Nest thermostats and Dropcams, to directly counter Amazon's smart home ambitions Therefore, I believe that Wozniak is right about Amazon Echo -- it could certainly become the "next big platform" by reaching far beyond Apple and Google's limited smart home ambitions.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun owns shares of The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares),, Apple, and Ford. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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