News has emerged that Amazon.com, Inc. (NASDAQ:AMZN) may be planning to launch its wildly popular Alexa enabled Echo Dot smart speakers in India by the end of 2017. This is an intriguing move by Amazon and could have tangible repercussions for Amazon’s hopes to capture a sizable share the Indian market and their attempts to establish dominance in the budding AI-powered Virtual Digital Assistant industry.
The Amazon Echo Dot smart speakers, along with its AI companion Alexa are wildly popular in the US. In fact, according to eMarketer, the Amazon Echo Dot controls 70.6% of the voice enabled speaker market in the US. Amazon and the Echo Dot have gone about relatively unchallenged until now. However, that is about to change very soon, with Google Home speaker gaining traction and Apple’s decision to enter the market with their HomePod speaker. In such a scenario, Amazon’s decision to sell the Echo Dot speakers in India seems like an early play to capture potentially one of the largest markets in the world by volume.
The Indian market is very different from the US scenario. Indian consumers value different things compared to their US counterparts. Specifically, competitive pricing is key in the market where people spend considerably lower on tech devices.
Amazon seems keenly aware of this fact, as is evidenced by their extremely frugally priced Prime Services. Amazon Prime Services cost up to $99 per year in the US, whereas they cost Rs. 499 per year in India, which comes to around $8 under the current exchange rate. The service offers faster deliveries and a large selection of movies and TV shows available for streaming. Needless to say, Amazon Prime has been quite a success in India thus far.
Of course, there are several other hurdles that Amazon Echo Dot will face in India. The two-factor authentication requirement for payments as well as the multilingual nature of the country poses significant issues that must be addressed. An Amazon executive claims that they intend to use “pass-phrases and other India-specific innovations” to get around these problems. A multilingual interface is also being developed at a facility in Chennai with planned support for Hindi, Marathi and Tamil, although the Echo Dot will only support English at launch.
While the Echo Dot speaker is quite popular in the US, for Amazon it is merely a vehicle to propagate and popularise Alexa. Amazon has bet big on AI and VDAs with Alexa, and capturing a market such as India would be a real coup for them. What this essentially means is that Amazon can afford to significantly undercut their profit margins on the Echo Dot speaker in India in order to drive the price down and adoption up. Not only can the launch of the Echo Dot help Alexa win the VDA wars, it can also act as a wagon to drive up sales and help Amazon overtake Flipkart in India.
