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Although Amazon is one of the most ubiquitous brand names in America, many Americans still associate it with same-day shipping or binge-watching “Downton Abbey.” That could change in about a week, as the e-commerce giant showcases its hardware prowess in its first-ever Super Bowl commercial.
The product that will bask in the national limelight is the Echo speaker, a smart product that analysts say may help Amazon expand its Prime service into millions of American homes.
Following a holiday season that disappointed investors despite a 22 percent increase in revenue, Amazon CFO Brian Olsavsky spoke positively about the growth of Echo, which comes with a Siri-like virtual assistant named Alexa, on the company’s quarterly conference call Thursday.
“We're really excited about the ecosystem and some of the skills that are being added to Echo… They pump more energy into Prime and really the whole ecosystem.”
Analysts say this is one key to Amazon’s future growth, as Echo acts as a kind of benign Trojan horse to facilitate the expansion of Amazon into a user’s home.
Much like iOS’s Siri, Alexa can answer questions and provide information, along with playing games and streaming content like music and podcasts. But analysts say the real value lies in its ability to bring Amazon’s retail empire into the living room or kitchen in a hands-free format: Users can ask Alexa to add items to an Amazon shopping list just by telling Alexa what to buy. Alexa can make it even easier for Prime members by actually making purchases, no clicking required.
“I think it’ll be an interesting device and well-positioned as we start on the Internet of things or smart device trend.” said Morningstar analyst R.J. Hottovy. “It complements other parts of the business so well.”
A teaser for the Super Bowl ad, starring actor Alec Baldwin and former Miami Dolphins quarterback Dan Marino, was rolled out this week. It shows the two men brainstorming an elaborate Super Bowl party, then turning to the Echo when an idea stumps them.
“It comes across as a thinking person’s ad. It appears funny and thoughtful at the same time,” Lincoln Merrihew, senior vice president of client services at Millward Brown Digital, said of Amazon’s first advertising foray on the most-watched TV program of the year.
Peter Daboll, CEO of ad analytics company Ace Metrix, said the commercial should be effective at introducing Echo, which is still a relatively niche device, to mainstream audiences.
“It’s cool new technology, but a lot of people aren’t familiar with it,” he said, adding that the Echo ad is likely to stand out because there aren’t any other big gadgets or devices in this year’s crop of Super Bowl commercials. “They’re not really competing with another device or a new phone or anything.”
Having the commercial focus on Alexa elevates the value proposition of the $180 Echo, along with pointing consumers toward the feature set that stands to benefit Amazon the most.
“It kind of does a nice setup,” Merrihew said. “They access Echo when they need to. … It actually frames the technology as an aid to you, not as controlling your life.”
Amazon has a reputation, sometimes to investor chagrin, of letting near-term profits take second place in pursuit of bigger strategic objectives.
“Our general philosophy is we want to find things — businesses that customers love, that can grow to be large, will provide strong financial returns, and are durable that can last for decades,” Olsavsky told investors on Thursday.
If it can get the Echo on enough end tables and kitchen counters, Alexa can help them achieve an information-retail symbiosis that delivers ongoing returns. “(We’re) very excited about the devices," Olsavsky said. "We like that they pump more energy into Prime and really the whole ecosystem.”