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3 Simple Reasons Google Home Won't Beat Amazon's Echo

By Leo Sun - May 20, 2016 at 7:24PM

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Google Home has a lot to prove before it can become an “Echo killer.”

Alphabet's (GOOG 5.20%) (GOOGL 5.11%) Google recently revealed Google Home, its response to Amazon's (AMZN 3.58%) Echo. Like the Echo, the Home is an always-on speaker which listens for search queries, plays music, and controls connected home automation devices.

Google Home. Image source: Google.

Home is powered by Google Assistant, which can be useful for users who store lots of data on Google services like Gmail and Calendar. Responses to search queries are optimized for audio, which produces more concise results than text. It also synchronizes with any device using the Cast standard, so it can communicate with Chromecasts to play videos, music, or other content. Moreover, Google made the speaker base customizable to better blend in with other home decor.

Google has stated that Home will launch later this year for an unspecified price. Several media outlets have already called the Home an "Echo Killer," but I believe that awarding that title to Google could be premature for three simple reasons.

1. Amazon owns product search

Google is the most widely used search engine in the world, but it has repeatedly failed to match Amazon's dominance of product searches. Back in 2014, former Google CEO Eric Schmidt admitted that "more than twice" the number of shoppers started their product searches on Amazon instead of Google. Amazon leveraged that dominance to expand into its customers' homes via Kindle tablets, Fire TV set top boxes, and several versions of Echo, then tied all those devices into its prisoner-taking Prime ecosystem.

In January, research firm Consumer Intelligence Research Partners (CIRP) estimated that its Prime user base in the U.S. had grown 35% annually to 54 million. Meanwhile, Amazon has continuously expanded its list of perks for Prime members, which includes Dash buttons and appliances for reordering consumables, grocery and restaurant delivery services, new original shows and movies, and faster delivery options. As Amazon integrates these new features into Alexa, the voice service which powers Echo, it could become an indispensable tool for Prime members. An April report from CIRP claims that Amazon has sold 3 million Echos so far.

The Amazon Echo. Image source: Amazon.

Since Google lacks that well-established product-based ecosystem, Home could be considered a redundant device when compared to a smartphone -- which also processes Google voice searches and communicates with Cast standard devices.

2. Amazon is (arguably) less creepy

Amazon generates most of its revenue from its online marketplace and cloud services. Google generates most of its revenue from targeted ads, which are crafted from user data and search histories. That crucial difference could encourage customers and partners to embrace Echo while shunning Home.

Google's data mining has turned off potential partners in promising industries before. Many banks refused to work with Google when it launched Google Wallet in 2011, since it insisted on collecting customer data and purchase histories to craft better targeted ads. German automakers blasted Google's driverless plans last year, warning that they could turn vehicles into data miners. That's why a consortium of German automakers subsequently bought Nokia's HERE mapping unit as an alternative to Google Maps

Similar concerns likely prevented the Nest thermostat -- which was intended to become Google's smart home hub -- from achieving mainstream adoption. The Nest unit also released an Internet-connected camera last year, and The Guardian warned that "Google could be watching your every move, if you let it." Earlier this year, Re/code reported that the Nest division wanted to make an Echo-like device, but privacy concerns prevented it from launching one. Google Home wasn't developed by the Nest division, but it could face similar concerns as those devices.

3. Amazon has a big head start

Those privacy concerns could keep potential partners away from Google Home, which would make it less useful than Amazon Echo. Amazon already holds partnerships with Fitbit, Ford, Uber, Domino's Pizza, Samsung, and a wide range of smart appliance makers. It's also opened up its API to developers.

Google hasn't opened up Home's API to partners or developers yet. But even after it does so, it could face tough questions about how it plans to use the data gathered through Home. If those concerns prevent major partners from working with Google, Home could face an uphill battle against Echo when it finally launches.

Google Home has a lot to prove

Google has a weak track record with hardware -- its purchase of Motorola became a money pit, numerous Android-powered set top devices failed, and Google Glass was punted back to the drawing board. On the bright side, the development of Home was led by Mario Queiroz, who oversaw Google's only big hardware hit, the Chromecast.

Unfortunately, Google Home will need to be more than "Google in a can" to be successful. Amazon has a bigger product search based ecosystem, more partners, and faces fewer privacy concerns than Google. Unless Google can address all three challenges, the Home could simply become the next Nexus Q -- a pretty device which fails to find an audience.

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