Amazon's new touchscreen Alexa-powered device, called Echo Show, is not the evolution of its voice controlled Echo line - rather, its touchscreen and camera open up commerce capabilities that failed to catch on with the ill fated Amazon Fire phone.

But due to these past failures, Amazon will have to carefully walk the line between end user functionality and privacy to make this work. If done well, the Echo Show could be a game-changing device for communicating, transacting and marketing.

Fire Phone - Failure to Ignite. In June 2014, Amazon launched the Fire Phone, its first handset. With a proprietary operating system and therefore little support from third party apps, it was a resounding failure for Amazon, resulting in a $170 million write down and handsets discounted to 99 cents just two months after launch. One key feature of the Fire Phone was ‘Firefly’ - a somewhat blatant attempt by Amazon to push ‘showrooming’ as a feature.

Amazon Public Relations
Amazon Public Relations

Users could point the phone’s camera at any physical object and the app would find a matching equivalent for purchase on the Amazon site. With hindsight, Amazon may now be taking a more covert approach to connecting physical and virtual domains and reviving Firefly features in a different guise. With a camera and video screen on the Echo Show, it is potentially possible to point an object at the device and have Amazon search its system for available inventory. It also opens up the capability to virtually try on clothes and makeup, as can be done with apps by retailers such Sephora. Finally, the Alexa app that is required for operation of Echo devices could also be extended as the portable means of capturing items for later purchase while on the go.

Visual Advertising is better than Verbal Advertising. Any frequent users of Amazon will be aware that their previous transaction history and searches are a pervasive part of the site and, indeed, any other online portal’s advertising. However, thus far, the Amazon Echo devices, being purely voice oriented, have not been a viable channel for suggested advertising since this would monopolize the function of the device. With a touchscreen display, Amazon now has the ability to extend their advertising into the home at all times.

If done badly, this could be catastrophic for the Echo Show and Amazon’s voice assistants overall, particularly if the device is perceived to be snooping on conversations and parsing words that relate to physical products. However, Amazon has gotten around this in the past, the Amazon Kindle readers typically have two versions, one that is advertising free, and a lower cost equivalent that comes with advertising. If the Echo Show is going to be used for marketing, then it may well be that Amazon and third party sponsors subsidize the cost of the device in order to build ubiquity

Peer to Peer Connectivity enabling Peer to Peer Payments? One of the key functions of the Echo Show is video conferencing between devices. In fact, Amazon is selling the Echo Show in pairs with the intention of building the network.

Assuming that the device will be a runaway hit, the power of connected nodes in a network (Metcalfe’s Law) comes into effect, shifting the Echo Show from just another gadget to something that is a requirement for modern living as much as the cellphone. With ubiquity, and the ability to authenticate users based on voice and facial biometrics, the Echo Show could enable an extremely powerful network for P2P, B2B and C2B payments.

All of the above are possible if Amazon applies the ‘frog boiling’ technique, a metaphor for cooking an unaware frog by turning up the heat too slowly for it to notice. The Fire phone was too aggressive; the Echo Show may be subtle enough to achieve Amazon's long-held goals.

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Nick Holland

Nick Holland

Nick Holland is a Senior Analyst at PaymentsSource. He has previously held analyst roles at Javelin Strategy & Research, Yankee Group and Aite Group.