Smartwatch – Amazon’s Next Battleground (Part 1)

(Michael Knight and his (smart) watch)

High five if you’re Gen-X like me, where we think (and still think) that the drama series of 80s like Transformers are still the best, landline phone meant we need to memorise the phone number that we need to dial to, but the rise of Internet means we were not able to do it because our little bratty brother is IRCing with his fellow chatters somewhere in Tokyo. All.Night.Long.

And Knight Rider. Which Gen-Xers can claim they lived in 80s, watched the popular drama series and think it’s just another dude with a cool car with cool jacket? It’s like a religious affair that we need to attend. Only our parents won’t go ballistic if we missed it because it’s not really a religious affair. In fact they might glad that we missed it, so we won’t become such a nuisance and keep asking why our family car can’t make a jump over a barrier or drove itself, just like KITT. Those were the days. right? And we’re still few years away from a fully-developed, fully-matured autonomous vehicle like KITT, let alone the one can make such a jump or had a flamethrower (although in the case of Tesla, they make both but yet to actually put their flamethrower into their cars. And I thank God everyday for that).

And the watch. Michael Knight’s watch. The one that can summon KITT to his whim or do things as he instructed. How many of us had pretend to talk to our phone just like him and hope a car would just appear out of nowhere?

 

Apple Watch vs. The Rest of The Smartwatches

 

(Apple Watch and Google Wear OS-powered smartwatch)

Although not the first to market, Apple has steadily improving its lineup since their first release of smartwatch in 2015 and their latest iteration focuses more into health and fitness-oriented features. Which is not  all surprising since Tim Cook sits on Nike’s board and he’s one of health-freak those who is serious about health and fitness. And surely Apple has overcome the image of their Apple Watch from a basic activity-trackers to a device which has a built-in ECG and fall detection capabilities inside. In short, Apple concentrates its watch towards monitoring and assuring our living condition, and having more than 700 millions customers to sell it to won’t hurt their chance either.

Google Watch is an interesting competitor for Apple Watch. Launched around a year earlier than Apple Watch, Google is using its usual path of licensing its OS to a slew of companies like Samsung and Huawei to come up with the actual watch, which is the same path that they chose for their Android smartphone. Somewhere along the path of Apple of offering a health and fitness-oriented feature, it also marketed the watch as productivity and entertainment tools. Let’s just hope it won’t face the similar issue with their Android smartphones, which is lack of standardisation since it’s manufactured by outside parties of Google.

What about the rest? Well, Microsoft has killed their Microsoft Band in 2016 (launched in 2016). Nokia (part of Microsoft) never launched their Moonraker albeit several rumours. Fitbit and Garmin is still running strong, especially if you’re a marathon runner. Huawei is not doing pretty bad, unless you’re afraid someone in Beijing might just snooped into your activities from time to time. And the jury is still out for Xiaomi’s Amazfit Verge (can’t they figure out a better and simpler name?) which were launched last month.

So it’s safe to say that the although we have at least two dominant players in the smartwatch market, it’s still concentrates either on activity-tracking or fitness.

And no news yet from Elon Musk whether he would build Tesla watch along with Tesla S/X/3 so that their buyers can summon their vehicle via voice-activated command. Safe to say that a smartwatch from Tesla Inc. is not secured. Perhaps somebody smokes weed somewhere that he or she forgot to propose one.

 

How Amazon Might Steal Everyone Else’s Thunder

 

What about Amazon?

For one, their Fire Phone was a dud, and Amazon took $170 million write-off on it. There’s no long line of queue of people trying to buy them, and its operating system is actually a forked version of their competitor’s OS (Google Android). Even when the price were reduced to 99 cents, there’s still not much demand from the public. Maybe it worked if Jeff Bezos made an offer to potential buyers that Amazon pays them 99 cents instead, but Amazon’s shareholders surely won’t be happy. Surely one of the most embarrassing moments for Jeff Bezos and his team. Hopefully his anger management classes paid off.

But with the benefit of hindsight, it’s actually worked nicely for Amazon. By leaving a domain that it can’t compete effectively, it relieved them from competing with at least two colossus of smartphone technology companies (Apple and Google) and concentrates their effort towards (potentially) the next computing platform with  Alexa and Echo (Who says failure is the end of things?) Clearly the failure of their smartphone effort has turned into a huge success stories, a success maybe even beyond than their wildest imagination. Amazon Echo clearly a distinct technology leader on its own, and now even Apple and Google wants to be part of it by releasing Apple Homepod and Google Home. Suddenly the two giants who used to crush Amazon has become its ardent follower. Clearly success is the best revenge for Amazon, and what sweet revenge it is. Jeff Bezos surely laugh his way to his banks as he’s now the richest person in modern history with a net worth of more than $150 billion (Yes, a billion with a big B).

(Amazon Echo and Echo Dot)

Will Amazon stops there with a smart speaker? I doubt so. Jeff Bezos is not known for a person who is content with the current state of Amazon, even though it’s already a gigantic e-commerce company and worth a trillion-dollar (albeit only briefly). And by having a smartwatch developed in-house, they could grow their e-commerce empire from online to offline, while simultaneously fending off an attack from Google/Walmart partnership and make Apple Watch just another boring watch. And not only Amazon can differentiate it from other popular fitness-based smartphone, but it can also become another channel for them to sell their products to their customers. Maybe even before their customers even realised that they need them.

How?

(Amazon Go at Seattle, Washington. Image from SounderBruce/Wikipedia)

Let’s imagine a hypothetical scenario of Amazon smartwatch does exist. A customer could wear them whole day without taking it out from his or her pocket (unlike smartphone) and it certainly would be installed with Alexa smart assistant. That smartwatch can track her health through ECG, fall detection or some other health condition and when it does, it could alert some emergency system which probably hosted on Amazon’s AWS. If it detects that the user is not in a good condition, it could also alert them to take some medication through Amazon Pillpack or maybe some other initiative, perhaps health insurance by their recently-announced partnership with Berkshire Hathaway and JP Morgan. That smartwatch would also enable her the ability to order i.e groceries on the go to be delivered to her home using voice command. Or maybe it can be used to order something at Amazon Go cashless store and she can just get verified by the smartwatch, enter the store and pick up her orders. The smartwatch could also be used by Amazon’s own drivers to notify Amazon HQ and their customers their whereabouts and how long the package would be delivered. By pairing it with Alexa Echo Auto, it could also authenticate the owner and user of a vehicle and start the engine. It could also works as part of two-way authentication for online shopping. The possibilities are endless.

In other words, it brings Amazon Alexa to a higher level of surveillance convenience to their customers and make their lives easier. Think about it as Amazon Alexa and/or Echo on steroid. And Amazon doesn’t need much advertisement to sustain its smartwatch or even its e-commerce business anyway. How annoying it would be if you ask a question through Google smartwatch and you gotta listen to a 30-seconds ads before you get your search result?

This will be nothing short of shockwave to other smartwatch maker. Suddenly there’s a cooler smartwatch that can do much more than tracking your lifestyle and helps you running daily chores at the same time without being such a nuisance. Apple Watch and Google Wear/Pixel Watch would be just a smartwatch, and Amazon whatever-the-name-that-they-are-going-to-give would be the smartwatch to have. And Amazon could offer it for a song to their Amazon Prime customers, which has more than 100 million of them and counting. Or Amazon could even give them for free!

Tim Cook definitely won’t be happy.

 

Will Apple and Google Get Amazoned? 

If Amazon announced that they’re going to build a smartwatch, the more appropriate question would be ‘When and how Apple and Google will get Amazoned?’

No doubt that Apple is currently the clear leader in smartwatch market, leading with 50% market share. But Apple’s strategy is still either promoting theirs as very cool fitness tracker or very luxurious fashion statement. Not at all surprising because Apple is still known as a hardware company and their services business is yet to become their main cash-cow. Apple Pay might come to rescue to give some competitive advantage to Cupertino, but they can’t control its adoption with the retailer. And they still have to compete Android Pay, which available not only for high-end smartphone models, but also at middle-and-low range. And Apple is not really known as producing a cheap cost-competitive products until recently.

In this case, not only Apple has to fight future Amazon smartwatch, but also Google-powered one. Google already has significant partnership in retail with Walmart while Apple has none. Partnering with Alibaba might be possible if there’s no security blockade from Washington, but I’m not sure if that’s the path they would go. Maybe Tim Cook should find out if Target or Costco interested to play along. Or if he wants to jump over the pond and see his options, Aldi or Lidl might be interested. So will Margrethe Vestager.

So if Amazon announced a smartwatch tomorrow, Apple will be on a hot seat. They’re vulnerable until they can figure out how to monetise their smartwatch on more frequent basis, not only at one time purchase. If they can’t figure it out, Jeff Bezos might eat them for lunch (Not breakfast, as I think he’s still digesting his octopus Whole Foods).

What about Google? Yes, they formed a partnership with Walmart, Target and several other retailers  (I’d prefer to call it a shotgun marriage since they’re pretty much don’t have a lot of options. Where else those retailers should turn to? DuckDuckGo?). By partnering, Walmart & Co can fend off Amazon’s encroachment into their domain, and Google will have strong partners in online (and offline) shopping. Having Android Pay won’t hurt either, as it benefits all parties. But how long the partnership would remain? After all, Walmart and Target is technically a competitor. In a hypothetical case of Walmart and Target gets into a fistfight, will Google steps in and offer an ‘adult supervision’?

Jeff Bezos obviously knows how to play his cards.

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