Technology Amazon has taken over your home and is now becoming your social network

22:35  15 july  2017
22:35  15 july  2017 Source:   CNBC

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You walk into your kitchen and say, "Alexa, what's going on today?". The cylindrical Amazon Echo Dot on your counter plays a soundbite from the president's latest news conference followed by a voice memo from your mom.

Amazon is working to tighten its stranglehold over the fixtures in your home and the way you shop. But why offer Amazon -branded electronics for so little money? Those cheaply priced devices are really lures to hook you into Amazon 's network of services and products.

  Amazon has taken over your home and is now becoming your social network © Provided by CNBC

You walk into your kitchen and say, "Alexa, what's going on today?"

The cylindrical Amazon (AMZN) Echo Dot on your counter plays a soundbite from the president's latest news conference followed by a voice memo from your mom.

What was once a voice-controlled personal assistant is becoming a way for family members and friends to stay in touch, making it a stickier experience with some of the qualities that people get from social networks like Facebook and Twitter.

Loads of consumers are going to be unwrapping their Echo Dots this weekend after the gadget was the best-selling item on Prime Day, Amazon's annual shopping gala. The Dot, already Amazon's most affordable Echo, was marked down $15 to $34.99 on Tuesday.

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According to Amazon, Prime members purchased seven times more Amazon Echo devices globally than on Prime Day 2016.

"The device gets better with everyone that joins the network," said Jonathan Frankel, founder and CEO of consumer device start-up Nucleus, in an interview. "Before the addition of communication features, the fact that a million other people owned Echo devices didn't matter to you at all."

That changes when your parents, siblings and close friends also have one and are using it to talk to each another. Apple (AAPL) has a similar dynamic with the video chat service FaceTime.

People can't "replace it with other hardware or they will cut themselves out of the network," Frankel said.

Frankel has a pretty good read on the market. His company, which is backed by Amazon, developed a video-conferencing device, only to see Amazon release a similar product called the Echo Show. Nucleus is now going in a different direction.

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Frankel expects Amazon to become more of a centerpiece in the home through voice calling, music and movies.

"The Alexa family of devices will become more and more integrated into your daily life," Frankel said. "Even though you might not shop on Echo Show this month or even this year, you're part of the Alexa ecosystem. They will be able to get you to order with it."

  Amazon has taken over your home and is now becoming your social network © Provided by CNBC

`You're being locked out'

Tech investor Aaron Batalion of Lightspeed Venture Partners has also wagered that as Amazon facilitates phone calls between its customers, more buyers will want to stay within the Prime ecosystem so they can keep in touch with other Echo users.

It may seem unlikely that users would opt to make calls or post updates with an Echo when many other devices already serve that purpose. But Amazon has shown that making life marginally more convenient can lead to big business, Frankel said.

In doing so, Amazon is expanding its lead over traditional retailers that have struggled to go digital.

"If you were the CEO of Wal-Mart (WMT) or Target (TGT), how would you respond?" Frankel said. "You need something inside people's homes. If you don't soon, you're being locked out of the future of commerce."

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