Amazon's cloud outages could create problems for the Echo (AMZN)

Amazon is aiming to bring its Echo devices into the mainstream by integrating them with critical aspects of users' daily lives, such as their schedules and the phone calls they make.

But the company has recently had to contend with a threat to this goal: Two recent outages of Amazon Web Services (AWS), the company’s cloud that helps power the devices, have rendered many Echoes unable to function — meaning that Alexa was unresponsive when users tried to wake the device, Business Insider reports. These incidents could tarnish the reputation of the Echo product line and present challenges to Amazon's smart home strategy, which relies on the Echo as a first entry point into users' homes.

If both potential and current customers view Echo devices as prone to glitches and unreliable, this could be problematic for Amazon, especially as companies like Google, Samsung, and Apple angle to launch competing devices. But here's why Amazon likely has a perception issue on its hands and not a larger systematic one:

But even a perception issue could pose real challenges to Amazon’s strategy. Amazon wants more consumers to own the devices, primarily as another entry point into the Prime ecosystem, but also to collect and analyze data on owners’ daily lives. If a negative perception of Echo products remains, growth in the install base of the Echo could slow. This would dent Amazon’s larger strategy, which involves it using its Echo products as a gateway into the home, which supplies data and insights into customers’ lives.

Even with these challenges, many of the biggest consumer technology companies are now moving into the smart home market.

Nicholas Shields, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the self-installed smart home that examines the demographics of the average smart home device owner and discuss why current smart home device owners are appealing to tech companies. The report also examines the plans of various tech giants in the smart home market and discuss their monetization strategies, and makes suggestions for how these companies can position themselves to make their products and devices more appealing to the mass market.

Tech companies primarily enter the market to enhance a core revenue stream or service, while device makers desire to collect data to improve their products and prevent costly recalls.
We forecast there will be $4.8 trillion in aggregate IoT investment between 2016 and 2021.
These companies are also seeking to create an early-mover advantage for themselves, where they gain an advantage by this head start on adoption.
Major barriers to mass market adoption that still must overcome include technological fragmentation and persistently high device prices.

Details the market strategy of prominent tech companies and device makers, and analyzes why which ones are best poised to succeed once adoption ticks up.
Offers insight into current ownership through an exclusive survey from BI Intelligence and analyzes what demographics will drive adoption moving forward.
Explains in detail which companies are poised to succeed in the market in the coming years as adoption increases and mass market consumers begin to purchase smart home devices.

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Amazon's cloud outages could create problems for the Echo (AMZN)

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