• Market Crumbs

Alexa Took Over Your Home...Now It Wants To Take Over Your Car

Image via Modern Survival Living

In November 2014, Amazon introduced Echo, a connected speaker powered by a virtual-assistant named Alexa. At the time, TechCrunch said "Amazon has a new product that doesn’t really have any current equivalent from any other tech company."

In just over five years, Alexa has grown like a weed. Alexa now offers more than 90,000 skills, up from just 1,000 in 2016. Early last year, Amazon announced they surpassed more than 100 million Alexa device sales across 41 countries. Amazon said the number of people who use Alexa daily and who own more than one Echo device doubled in 2018. Amazon even struck a partnership with homebuilder Lennar to install Alexa-enabled devices in new homes.

Amazon doesn't break out Alexa in its earnings reports, but mentioned the term "Alexa" 22 times in its most recent earnings press release compared to 54 mentions of "AWS." For reference, AWS—which stands for Amazon Web Services, accounted for roughly $9 billion of Amazon's $70 billion in revenues during its most recent quarter, or about 13%.

Mark Mahaney of RBC Capital believes Alexa could generate between $18 billion and $19 billion in sales by 2021, driven by voice-command e-commerce sales. "In general, Amazon's device philosophy has been to sell the product at cost and capture margin on the services it provides when consumers use the product," he wrote in the report.

The growing popularity of Alexa hasn't come without controversy, however. Not surprisingly, most of the criticism of Alexa revolves around privacy concerns. For example, last year it was reported that Amazon has a global team of thousands of full-time employees and contractors across several countries listening to Alexa conversations and transcribing them. The report said Amazon doesn't "explicitly" tell users that it employs people to listen to some of their most intimate conversations.

So while Amazon has strategically sold more than 100 million spying devices across 41 countries despite increasing criticism, what is Amazon's next plan for Alexa? We got our answer as the Consumer Electronics Show kicks off this week.

Amazon is pushing Alexa deeper into the automotive industry, so it can now have access to your conversations when you're outside of your home as well as inside of it. Rivian, the electric vehicle startup backed by Amazon, as well as Lamborghini, separately announced yesterday that they will integrate Alexa into their vehicles. They join Toyota, BMW, Ford and Audi, which have all previously struck deals with Amazon to integrate Alexa into various models.

Amazon also announced it will begin selling its Echo Auto, which allows consumers to easily add Alexa to their car via an auxiliary input or Bluetooth connection, outside of the U.S. The device will be available in India on January 15 with additional countries to follow later this year. Amazon even announced it is adding new skills for Alexa, such as the ability to pay at 11,500 Exxon and Mobil stations by saying "Alexa, pay for gas."

"We really are extending ourselves more and more out in the ecosystem from manufacturing to connected car," said Jon Allen of Amazon Web Services’ automotive practice. "The takeaway message on this is if you go to CES this year we really are taking it as a 'One Amazon' view."

So as Amazon expands Alexa further into the lives of people across the world through integration with automobiles, it's hard to believe profits won't come without further scrutiny of its data collection practices and concerns over privacy. 

Leftover Crumbs

  • Yum! Brands is diversifying. Yum, which owns Taco Bell, KFC and Pizza Hut, has acquired Habit Burger Grill to break into the fast-casual restaurant segment. Yum is acquiring Habit, which has nearly 280 locations, for $375 million. "As a fast-casual concept with strong unit economics, the Habit Burger Grill is a fantastic addition to the Yum family and has significant untapped growth potential in the U.S. and internationally," Yum CEO David Gibbs said. The deal is expected to close in the second quarter. 

  • When all else fails, sell real estate. Bed Bath & Beyond has netted $250 million in proceeds after completing a sale-leaseback on 2.1 million square feet of real estate. Bed Bath & Beyond said the deal covered retail stores, office space and a distribution center. CEO Mark Tritton, who recently joined the company from Target, said the deal "marks the first step toward unlocking valuable capital ... that can be put to work to amplify our plans to build a stronger, more efficient foundation to support revenue growth, financial stability and enhance shareholder value."

  • Pizza delivery...innovative. Little Caesars, the world’s third-largest pizza chain, is rolling into the new decade by offering a simple service - pizza delivery. The company, which will partner with DoorDash, hasn't offered pizza delivery previously. The partnership, which will be available at 3,600 locations in the U.S. and Canada, will cover 90% of Little Caesar's restaurants in the U.S. and Canada.

  • It's still not even the most expensive bluefin tuna ever sold. A 608-pound bluefin tuna sold for 193 million yen, or about $1.8 million, at Tokyo’s Toyosu fish market. Self-described "Tuna King" Kiyoshi Kimura, who is president of the Tokyo-based operator of restaurant chain Sushizanmai, was the winning bidder. "This is the best," Kimura said. "Yes, this is expensive, isn’t it? I want our customers to eat very tasty ones this year too." Despite the lofty price, the winning bid is well below the record $3.1 million Kimura paid for a 612-pound bluefin tuna last year. 

  • Have we hit peak Fortnite? Fortnite brought in $1.8 billion in 2019, making it the top-grossing online video game, according to SuperData. Despite being the top-grossing online video game for the second-consecutive year, the total represents a 25% decline from 2018 when Fortnite broke the single year record. Overall, the industry earned $120 billion last year, an increase of 4% from 2018.