- A Star Trek computer in your home
- How Amazon will exploit AI
- A Time of Serial Monopolies
When Jeff Bezos was 11 years old, he discovered an odd looking machine in the hallway of his elementary school. It was a primitive mainframe computer — “with a teletype that was connected by an old acoustic modem. You literally dialed a regular phone and picked up the handset and put it in this little cradle.”
None of the teachers knew how to operate the machine, but Bezos worked through a stack of manuals and staying for hours after school, he made a great discovery.
“The mainframe programmers in some central location somewhere had programmed this computer to play Star Trek.” Bezos became obsessed.
When time came to act out Star Trek in the playground, some kids would scramble to play the role of Spock, or Captain Kirk.
“I would take the computer. The computer was fun to play because people would ask you questions.”
A Star Trek computer in your home
In November 2014, Amazon revealed it’s own fledgling version of the Star Trek computer. Alexa is an always-on Artificial Intelligence from the cloud, actively waiting for the next voice command to help — no buttons, screens, keyboards– just ‘voice.’
She manifests from a $179 cylindrical speaker that can sit in the living room and is slowly being recognised as the most promising development in hardware since the first iPhone.
In fact, Alexa fits into a series of recent developments around AI at Amazon that herald a step change in personal computing.
Alexa is being groomed to form the hub of the ‘intelligent home’. She can be commanded to play music tracks, adjust the sound volume or dim the lights, call an Uber or add items to a grocery list. The real point is that she is not smartphone constrained. It’s purely voice driven—no typing or screen scrolls — and a year after launch, many reviews are expressing surprise at just how easily Alexa has inveigled herself into the routines of the house.
How Amazon is exploiting AI
Amazon is looking to establish Alexa as the command console in your house, constantly communicating with other connected devices. Alexa will collect data about your life from your home, store and parse that data in the cloud and continue to learn as it connects to more and more devices in your home. What we are seeing here is the convergence of AI, the Cloud and the Internet of Things.
Amazon has already unveiled a suite of tools to establish Alexa as a master console.
Amazon Web Services IoT is a downloadable service to help developers to connect devices together and to the Cloud, and Alexa Voice Services will help developers to add Alexa voice control to their own devices.
Amazon Dash has been integrated with Brita and its Infinity Jug. When the jug has filtered 40 gallons of water the system alerts Amazon which readies a replacement filter for shipment or even ships it automatically. So far Amazon has signed up with NASA, Philips, GE, Brother, Samsung Printers, Whirlpool, Brita and Ford.
This will be a subtle invasion. Amazon lab researchers working on Alexa with Bezos report that again and again he vetoes the inclusion of features because they stop Alexa from being simple and hassle free — invisible, ever present and helpful.
Bezos doesn’t want won’t stop at the home.
Alexa caused a stir earlier this year when she was demoed by Ford as the voice and intelligence for its prototype SYNC in-car technology that enabled the driver to open the garage doors, turn on the porch light, check whether the car’s locked and turn on the engine, all by verbal command.
In your house, in your car, Bezos will look to have his Star Trek intelligence, always on hand to help and guide you to your next purchase.
In many ways, AI is just a means to an end for Bezos. He started selling books to gather data on the habits of affluent, educated readers. He was an early adopter of machine learning because it allowed Amazon to constantly monitor and undersell the competition across all industries.
With Alexa, and your system of connected devices, Bezos will be able able to collect huge streams of your most intimate data — what you eat, what you drink, what you listen to, your daily domestic habits, the conversations you have with your family. There are three takeaways for investors.
1. We are becoming reliant on intelligent machines
In the first stages of the digital revolution we linked networks of computers together. Then over this internet we linked documents, pages and data. Companies like Amazon exploited all this new data to work out our habits and tastes, and to establish supremacy over companies who were not born online.
Now we are busy linking devices to exchange this data. These devices will be embedded in our homes, in our cars, slipping seamlessly into our daily lives. And companies like Amazon, Google and other Tech Titans will make that happen.
2. A time of serial monopolies
For investors, Amazon is a cogent example of Amazon’s obsessive drive to invest in the future under ”serial monopolist” Bezos. An excellent 2014 piece in New Yorker captured why some investors feel compelled to stay or sign up for the Amazon ride: ”it seems preposterous that Amazon started as an online book seller to become not just the ‘everything store’ but the Everything.”
While the Amazon ‘Prime’ household evolves or not into the Amazon fiefdom Bezos envisages, the company is hardly short on growth prospects since by 2018, STILL less than 10% of global retail sales of nearly $30 trillion a year will be online.
I believe this demands a new kind of company analysis. Amazon is a company with a total focus on converting revenue into free cash flow to reinvest into fast improving its technology base and infrastructure and pricing the competition out of the market.
3. Whole industries could be destroyed
A great many businesses were extinguished so that Amazon could become a global superstore, a hardware manufacturer (Alexa, Kindle), a utility (Amazon Web Services), a video distributor and a production studio (Amazon Prime). And many companies who are already falling behind in the AI race will be exploited. I will keep you abreast of sectors and industries that look badly exposed in these briefings over the coming months.
In my next briefing though, I will look at how AI is already causing ructions in the stock market, potentially heralding some rather immediate risks for your investments.