Topps Blog: Conversational Computing Platforms: Google vs Amazon vs Apple vs Facebook

The primary purpose of any computing platform is to get work done. Earlier, this was done by mainframes, then came PCs and they were then followed by smartphones. With the smartphone market facing just single-digit overall growth and with almost everyone in the developed countries owning smartphones, the hunt for the next computing platform is at an all-time high. There are many upcoming computing platforms but conversational computing platforms have been garnering quite some interest over time. A lot of major tech companies are invested in this.

Conversational computing platforms and its origin

Although, till date, most of the computing platforms have owed their existence to the US, conversational computing platforms might be something that would owe its existence to the east and China in particular. It wouldn’t be incorrect to say that China’s Tencent pioneered the concept of conversational computing platform through its WeChat application. The Chinese application is a world in itself and allows you to chat, send money, book rides and do a whole lot of other things from the app itself. All these things are facilitated by official accounts that users can follow and interact with to be notified about new offers or perform various interactions with a particular company.

WeChat has been highly lucrative for Tencent, the average revenue per user on WeChat is pegged around $7 and WeChat is pegged to have around 800 million users according to Statista. Looking at the kind of success Tencent received with WeChat, American tech companies wanted to implement something similar as well. However, their approach differs and conversational computing platforms aren’t necessarily restricted to messaging alone.

Types of Conversational Computing Platforms

There are two types of conversational computing platforms that are being worked upon right now. One of it relies on voice while the other one relies on text. The voice-based conversational computing platform is what companies like Amazon and Google are working upon with their products such as Amazon Echo and Google Home. On the other hand, companies such as Facebook and Apple are working on text-based conversational computing platforms with their products such as Messenger and iMessage.

It’s important to note that some companies are hedging their bets by having a presence in both text-based and voice-based conversational computing platforms. For example, while Google has Google Home as its voice-based platform, they also have Allo as their text-based platform. Similarly, while Apple has iMessage as its text-based platform, they also have AirPods and are rumored to be developing an Amazon Echo competitor which would act as their voice based conversational computing platform.

The core

The core behind both text and voice conversational computing platforms is a smart assistant. For Google, it’s Google Assistant, for Amazon, it’s Alexa, for Apple, it’s Siri and for Facebook. it’s M. An AI-powered smart assistant is the backbone of every conversational computing platform that’s being created by major tech companies around the world. The AI-powered assistant acts as a butler, helping make sense of your words and carrying out your commands while trying to reply in the most human way possible. Now, I’ll try and analyze the various tech companies when it comes to conversational computing platforms – their strengths and weaknesses.

Google

Google has two forms of conversational computing platforms which they are trying to promote. One is Google Home and the second one is Allo. I personally feel that Google should try and focus all its efforts on Google Home. I have tried Google Allo and honestly it’s not a bad chat app. It has a few cool tricks up its sleeve and Google assistant has been pretty good so far. But chat apps require network effects to be successful and Google Allo lacks that. Very few people would be interested in using Google Allo if their friends are not using it. Sure, there’s going to be some initial excitement surrounding Allo but ultimately everyone would want to go back to their regular chat apps. Also considering that almost every country now has a dominant chat app, there’s no clear path for Allo to dominate.

Also Read: The only way Google Allo can Succeed is if it’s Everywhere

Although Allo lacks the network effects, Google has a pretty impressive lead over its competitors when it comes to AI. This was very visible during my use with Allo when the app was able to suggest smart replies even when the conversation was happening in Hindi. Google’s lead in machine learning and AI is hardly matched by any other company as of now. Combine this with the vast amounts of data Google has about you thanks to the numerous searches you have made, email exchanges on Gmail, usage of maps, data from Android etc and Google’s bot can be smarter than most others out there, at least on paper.

Chat apps require network effects and as of now, it’s very difficult for a new chat app to try and gain users. The future and success for Google primarily lie in voice based conversational computing platforms. Voice based conversational computing platforms also require network effects. The network effects of voice based conversational computing platforms are very similar to that of the smartphone market. The smart AI can be the OS. For example, in case of Amazon, Alexa becomes the OS. The devs that develop use cases revolving the smart AI can make the apps. The apps are basically skills in case of Alexa. Then there is the terminal device/smartphone, which is Amazon Echo in the case of Amazon.

Now whichever smart AI has a higher reach will attract more developers and whichever smart AI has more apps built around it will attract more users. Although Amazon Echo has had an early start, the voice based conversational computing market is far from saturated. By comparison, everyone has a smartphone that’s running either iOS or Android and every country has a chat app that’s now considered integral for communication. The voice based conversational computing platform market is nowhere near as saturated.

It is true that Amazon has had a lead with Amazon Echo but this lead can easily be broken. Google already has an excellent AI smart assistant in the form of Google Assistant, Google Home already makes use of that just like how Amazon Echo makes use of Amazon Alexa.

After Google launched Google Home, they also released an SDK. Developers can tap into the Assistant SDK to make Actions for Google Home. Actions are basically what skills are on Echo.

Facebook

The biggest benefit Facebook has in this war is obviously its user base. Facebook has two chat apps with a user base of 1 billion and above namely Messenger and Whatsapp. Although Whatsapp was destined to hit the 1 billion mark, Facebook’s decision to unbundle messaging from the core Facebook app did help a lot in Messenger’s growth. Starting in April this year, Facebook completely opened the floodgates for bots on Messenger. Facebook eventually plans to make Whatsapp a platform. It’s very clear here the Facebook is trying to take a page out of WeChat’s book. Just like how WeChat allows its users to perform a host of functions from right within the app, Facebook wants to enable the same on Messenger/WhatsApp.

There was a lot of enthusiasm in the beginning but as it turns out, the enthusiasm on paper didn’t really pan out in real life. Bots were riddled with bugs and had received largely negative reviews from the public. Most of the times, the bots simply weren’t able to comprehend and execute even the simplest of commands. This was made apparent when at this year’s TechCrunch Disrupt, David Marcus, head of Messenger at Facebook himself admitted that bots weren’t what they were hyped to be. Although Marcus said that the lack of quality in bots was down to the low preparation times developers had, the damage had been done; Facebook has added payments and web views but how far extra time and these extra features help in improving bots remains to be seen.

Some people feel text-based conversational computing platforms might never take off in the US like they did in China because of the vast cultural differences between the two countries. There are many reasons why WeChat became successful in China. First of all, the Chinese directly leap frogged to mobile payments. It is literally possible to leave your wallet at your house and go out and make all sorts of payments for all sorts of services through your smartphone alone. This kind of ubiquity of mobile payments in China provided a solid base for apps like WeChat to be an all in one hub for all your needs. Secondly, apps in China are judged depending on the number of functionality they can provide whereas apps in Western countries are judged depending on how well the app can do that one function that the app claims to do. There are quite a few other reasons as well but the end point that matters is that bots on Messenger have had a bad first impression.

While Facebook’s two chat apps are definitely a great moat, bots themselves have failed to make a great first impression. While bots haven’t lived up to the hype, voice based conversational computing products such as Amazon Echo has made a great first impression. Amazon Echo has sold close to 3 million units till date and almost everyone who has used has found it to be extremely useful. The conversational computing platform market as a whole is still at an early stage. Maybe both text and voice based conversational computing platforms might survive or maybe either or both of them might die. Anything can be possible, no one knows.

But if first impressions are any indication then people have definitely been more attracted towards stand-alone voice based computing platforms than text based. If the future entails voice as the winner then Facebook is in trouble as the company has no Amazon Echo or Google Home competitor and even Facebook M is still in testing.

Apple

Apple, just like Google, has its presence in both the forms of conversational computing platforms i.e voice based as well as text. As far as text based is concerned, Apple has iMessage which it has opened up to a particular set of developers for building integrations. As far as voice is concerned, Apple has entered this arena in some form through AirPods and according to the reputable journalist, Mark Gurman, famous for his Apple scoops, Apple is also building an Amazon Echo competitor. Apple really needs a new stream of revenue considering the falling iPhone shipments and the accompanying revenue loss. But I really feel Apple is in quite some dilemma when it comes to conversational computing platforms.

If iMessage is to be converted into a conversational computing platform, it needs to go cross-platform. Android commands more than 80% market share of the global smartphone market. I know some would point that global market share isn’t accurate as Apple is heavily disadvantaged in emerging countries and I agree with that. But even in its home country of USA, Apple has less than 50% market share and the same is true for several other countries where Apple is the dominant manufacturer. The market share of Apple wouldn’t have been a problem but other chat apps exist as well, and leaving iMessage, all of them are cross-platform. It makes sense for developers to build bots for the chat app that’s supported by smartphone OSes rather than develop for iMessage and miss out on as much as half the market. There are two things Apple can do, one is to make iMessage cross-platform just like how Apple Music is available for Android or weave iMessage even deeper into iOS such that competing chat apps such as Facebook Messenger aren’t able to provide the same experience.

But even if Apple manages to do either of the above, I still feel Apple might not be able to do well. The biggest problem, in my opinion, is privacy. For bots in chat apps to be extremely useful, they need to mine a lot of data from the end device. If access to this data isn’t allowed then the job of the bot becomes even more difficult. Apple’s answer to this is differential privacy but I wonder if it’s going to help. After all, Google had to back from its initial privacy claims of Allo in order to make sure that Google Assistant would perform at its best. I am pretty sure, the folks at Google would have tried to keep privacy intact if it didn’t have a hit on performance.

Coming to conversational computing platforms, although AirPods can be considered as terminal devices, it’s difficult to think that users would wear the AirPods always, sure AirPods can help act as terminal devices when you are listening to music but if you aren’t a music junkie, are AirPods really all that helpful? Thankfully, it’s being reported that Apple is already working on an Amazon Echo competitor. Now Apple is great at designing hardware and I’m pretty sure the Apple smart speaker will be a charm to look at for the most part but I feel Apple might find itself disadvantaged in the smart speaker market. Since there’s no UI to work upon when it comes to a smart speaker, all that matters is the smart AI that’s powering the smart speaker and Google Assistant beats Siri in most cases.

Amazon and Google make money through alternate routes and have never heavily depended on hardware. Every time you make a purchase through Echo, Amazon’s purpose is served. Similarly, Google mostly relies on ads, even if ads can’t be served through Google Home in the near term, the data collected will help in targeting ads with even more precision on other Google properties like Search, Maps, Gmail etc. Apple’s reliance on hardware profits, for the most part, makes the smart speaker a tough proposition.

Amazon

If there’s one company that has had a runaway hit with conversational computing platforms, it’s Amazon. The company had been trying its hand at hardware for quite some time. Although the Fire range of tablets and streaming boxes have done decently well, the Fire Phone was an absolute disaster. Almost everyone had predicted that the Fire Phone would be a flop and unsurprisingly, Amazon had to a take a write-down of several hundred millions of dollars for its Fire Phone series. But to the extent that Fire Phone was a flop, Amazon Echo has been a hit.

Amazon has managed to sell 3 million Amazon Echo devices and even introduced a smaller Amazon Echo Dot product. Nearly, every single review of Amazon Echo has been very positive and the average rating on Amazon.com is above 4.4 stars. Fire Phone being a flop is more than compensated by the hit that is Amazon Echo. Amazon’s Alexa already has more than 3000 skills developed for it. Amazon has also opened Alexa to third party manufacturers making it all the more attractive to developers.

What Amazon gains from Amazon Echo is pretty straight forward. It’s an always available assistant. Amazon’s entire e-commerce business is heavily reliant on reducing the gap between the intent to buy something and actually being able to order it while making sure it reaches you at the shortest possible time. If you think about eating chocolates and can order the same with least difficulty, Amazon’s mission is accomplished. Now what better way to order stuff than have a constantly available assistant right by your side and that’s exactly what Amazon Echo is. It’s an always available assistant which you can summon to book taxis, check weather and of course buy stuff from Amazon. I personally feel Echo can be the best consumer-facing product Amazon has ever made and it fits so perfectly with the rest of Amazon. There’s only one disadvantage that Amazon has. While Google, Facebook, and Apple have tons of data upon you that they can feed to their AI assistants, Amazon, by comparison, has only shopping data for the most part. Apart from this, Amazon is uniquely placed to do well in the smart speaker/ voice based conversational computing field.

Conclusion

I would again reiterate that the future of conversational computing platform is far from certain. For all you know, they can be a fad that might go away or they can also be the next big computing platform. But whatever be the case, almost every major tech company is invested in this in some way or the other. It would be interesting to see how all of this plays out in the years to come.

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