The retail giant's smart speaker has generated strong interest since it made its debut back in 2014. Amazon hasn't disclosed exact sales figures, but demand has outstripped supply -- Amazon has struggled to keep the Echo in stock. Analyst estimates peg the number of Echos sold at around 3 million. That's impressive for a new product category, but to date, the Echo has faced no competition.
That will soon change. Google plans to launch Google Home later this year. Like the Amazon Echo, Google Home is a connected smart speaker controlled through voice commands and largely intended to serve as the central hub of an increasingly digital smart home. In time, multiple digital personal assistants could flourish, but consumers have limited spending power and only so much table space. At least for the foreseeable future, buyers looking for a smart-home solution are likely to choose one or the other.
Echo certainly has some advantages. But Google Home will offer consumers compelling features the Echo may struggle to match.
1. Consumers are already comfortable asking Google questions, and Google is good at answering them.
When it comes to answering questions, Google has had a lot of practice. Each day, it handles billions of search queries, and it has done so for many years. Most of these are conducted through text, but voice plays an increasingly vital role. If you own an Android device, there's a good chance you've talked to Google before. About 20% of the time, Android users turn to voice dictation when they want to search the web.
At Google I/O last month, Google CEO Sundar Pichai announced Google Assistant, the technology that will power Google Home. Google Assistant places a great degree of emphasis on conversational context and tone and will be able to remember users' search queries and give answers in the proper context. Asking "What's playing tonight?" will return a list of films at nearby cinemas. Following it up with "I want to take my kids" will refine the list to family-friendly features.
The Amazon Echo can conduct web searches by tapping into Google's primary competitor, Bing, but its abilities are limited. As a device, the Echo has been widely praised, but reviewers have often lamented its poor search capabilities. TheNextWeb called it downright "awful." Having a better grasp on web search is a key capability that could give Google Home an edge.
2. Google Home will integrate with Google's other web services.
The Amazon Echo integrates well with Amazon's services. It can reorder physical items from your shopping list, for example, or play a song from Prime Music. It can read you an Audible audiobook or track a package that's on its way to your doorstep.
Unsurprisingly, the same will be true for Google Home. Amazon's services are tremendous, but Google's appear to be a more compelling fit for the product category. By leveraging Google Calendar, for example, Google Home can adjust your schedule. With YouTube, it can provide video. And with Google Maps, it can make route recommendations. The Amazon Echo can provide traffic updates and create new events on your Google Calendar, but it lacks the tight integration that may make Google Home more compelling.
3. Google Home will integrate with Chromecast.
Google has said Home will integrate with third-party apps and popular smart-home devices, but its most compelling integration may lie with its own streaming dongle, Chromecast. To date, Google has sold 25 million Chromecasts, and it could sell many more if Google Home is a success. By attaching Chromecasts to televisions and speakers, Google Home will be able to control all entertainment throughout the house. YouTube videos can start playing on a nearby television -- speakers in specific rooms can be instructed to play a particular song.
The Amazon Echo can also play music. Indeed, it's commonly cited as one of the most compelling aspects of the device. At the same time, Amazon's smart-TV solution, the FireTV, features Alexa and can be controlled using voice commands. But Google's solution is more centralized -- one Google Home can control all the devices in a given house. That makes it more affordable -- each Chromecast retails for just $35. Voice-controlled FireTVs start at $50, and Amazon's solution for attaching the Echo to other speakers, the Echo Dot, costs $90.
More searches or more buying?
Traditionally, Amazon sells it's hardware at or near cost -- it's unlikely that it's making much money when it sells an Echo. The same has generally been true for Google with its Nexus devices and Chromecasts.
Instead, these companies are likely to benefit from these devices by enabling other aspects of their businesses. If you put a Google Home in your house, you'll probably be doing a lot more Google searches and spending more time with its services -- driving additional usage and advertising dollars. Users of the Amazon Echo, in turn, are likely to renew their Prime memberships and make more retail purchases.
Right now, Amazon has a clear head start, but it will be interesting to see how the market unfolds once Google Home arrives.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon.com. Try any of our Foolish newsletter services free for 30 days. 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.