Amazon’s early lead in the home is a problem for Google — and not just because Alexa is outselling Home by a wide margin.
In the new world of voice-powered computing, Amazon is rolling out popular features like skills and reminders that take users entirely out of Google’s massive ecosystem. Late last month, Google added reminders to its home assistant, a long-awaited feature that lets consumers get voice prompts to walk their dog or take out the trash.
Even as Google plays catch-up with new functions and lures users with lower-priced products, the web giant faces a business model conundrum. Almost 90 percent of parent Alphabet’s $90.3 billion in revenue last year came from advertising, mostly search, video and mobile.
Without a visual interface, what happens to Google’s ad business?
“You basically can’t deliver ads when it comes to a voice query,” said Lightspeed Venture Partners’ Alex Taussig, who invests in consumer internet start-ups. “If I ask for the nearest coffee shop from my office, you can give me one answer and that’s probably not an ad. So it is very hard for Google to monetize these product searches.”
This isn’t the first time Google has been forced to reckon with a changing computing paradigm.
When consumers moved to mobile, Google faced the risk of so-called vertical search, or industry-specific queries. Rather than going to Google.com, smartphone users would open the Kayak app to search travel or Yelp to find restaurants. But Google survived and thrived by populating its Android operating system with apps for calendar, maps, YouTube and photos. Even if people were doing less search, they were still sticking with Google and serving up all that valuable data.