Amazon is primed to make money from Alexa somehow, warns Jon Honeyball

It’s hard to see how Amazon makes any money from Alexa. Of course, it sells all the Echo hardware with Alexa enabled on it, but these come at a set of keen price points. I’m sure there’s also some sort of developer integration licence fee, whereby third parties can embed Alexa within their products. But is this going to generate a large amount of money? I think not.

Then there are Alexa apps, or “skills”, which allow you to connect devices to your Alexa system. These could enable relatively simple commands such as turning on and off lights or adjusting the heating, or more complicated solutions such as turning on the TV, closing the blinds, choosing a channel and so forth. All these are freebies, including the skills that mean you can listen to streaming music from the likes of Spotify.

Some skills do have a paid element within them: everything from reading bedtime stories to mysteries that you have to interact with. But are these going to earn Amazon the big bucks? Personally, I’ve never gone beyond simple music streaming and control of my Philips Hue lights. If this makes me a techno failure, then so be it.

Things might be different if I had a video doorbell that could beam a live image to an Alexa-enabled device that had a screen, but I’ve never progressed to that level of capability. It doesn’t help that I have a natural aversion to devices that stream video from my home to a cloud service, preferring to keep things within the local network. This is probably my cynical old age showing, because I know my elder sister Marianne absolutely adores her Ring doorbell, and couldn’t be parted from it.

But again, outside of some niche cases of taking money from developers who offer in-skill purchases, I’m struggling to track the big money, the multimillion-dollar income streams you need to support all of this development and the cloud services on which they’re based. Amazon itself has tried a few abortive attempts to get family shopping done through its platform, including Alexa where appropriate, but as the demise of the Dash button indicates, we just don’t seem to shop that way for daily essentials. It doesn’t help that Amazon Fresh, its grocery service, is restricted to major cities such as Birmingham, Liverpool and London. Even then, it’s a postcode lottery when it comes to whether you’re one of the chosen ones.

With nothing to tie me to Alexa, it should be no surprise that I quickly converted to the original Apple HomePod when it came along. The sound quality was far better than the early Echo units I had bought and I didn’t miss Alexa one jot; the capabilities that I had used with my Echos were seamlessly transferred over to the HomePod.

This morning, however, my mate Phil got in touch. He has several Alexa units on his home network, along with a Canon inkjet printer. At some point in the past, he enabled the Canon Printer skill for Alexa, which resulted in this intriguing email:

“You are receiving this message because you connected your Canon iP7200 series to Alexa on 02/10/21. Alexa noticed that you will need to replace your cyan cartridge soon, based on your Canon iP7200 series usage. You can view products on Amazon that are confirmed to work with your device. Or you can set up smart reorders to automatically receive replacements of your choice. Save 10% on all ink and toner smart reorders.”

So Amazon, through Alexa, is now starting to data-mine your home to find things that it can offer to sell to you. This pushes the Amazon online store directly into the operation of your household, with Alexa the means to join up the dots. It’s true that Phil had manually installed the skill for his device, but it isn’t much of a step to have an auto-discovery and identification device service that can root out more ways to interact with you - and to do so in a meaningfully profitable way for Amazon.

Maybe that’s the longer term goal here. Make Alexa ubiquitous through cheap hardware and then use it as a tool to find out things Amazon can offer to sell to you. If so, Amazon is taking its time. Or is this the result of someone senior in Amazon noticing how much Alexa is costing the company, and hence looking for any way of recouping costs?

There is a third possibility: it’ s the old bait-and-switch approach, where a company offers a free service, makes you reliant upon it, and then starts charging for subscriptions to keep it working.

I don’t know which of the three scenarios is more likely, but one thing is surely clear: if Amazon is going to keep Alexa going, something big is coming in the future. And that thing is going to cost you.

This pushes the Amazon online store directly into the operation of your household, with Alexa the means to join up the dots