Amazon just took a key step toward expanding Alexa (AMZN)

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XMOS became the first company approved by Amazon to build an Alexa Voice Services (AVS) development kit and an AVS-qualified far-field microphone array, according to TechCrunch.

Amazon is looking to expand the Alexa ecosystem, both with its own devices and those from partners, and this is a key step in spurring development that will drive down the cost and improve the quality of AVS-capable devices.

XMOS’s microphone array will allow companies that use its development kit to build their own Alexa-enabled devices. While there are a number of devices like this on the market already — like Anker’s Eufy or Ecobee’s latest thermostat — these devices don’t pick up the activation wake word as well as Amazon’s Echo devices due to the nature of the microphone included, meaning people are less likely to use them. XMOS uses an array featuring multiple microphones as well as radar typically used in cars to more accurately isolate the wake word from other background noise, so the speaker will activate when — and only when — the user wants it to.

Amazon is experimenting with hardware to continue to grow Echo sales and to drive up Alexa’s user base, but it won’t be able to create products for all parts of the market.Companies will be able to experiment with hardware in different form factors — XMOS’s arrays are flat so could be more easily fit into things like frames or TVs — and try things out that Amazon is unwilling to, potentially developing their own niche in the Alexa ecosystem. Amazon is on track to sell more than 70 million Echos through 2022, according to BI Intelligence estimates, but growth will likely slow in a few years precisely because of products and kits like this being the basis for third-party Alexa devices. Amazon’s interest is in developing the ecosystem, and while it will use its own hardware to do that, there is an opportunity for device manufacturers to establish themselves as well.

Smart speakers — Amazon's Echo, for example — are the latest device category poised to take a chunk of our increasingly digital lives. These devices are made primarily for the home and execute a user's voice commands via an integrated digital assistant. These digital assistants can play music, answer questions, and control other devices within a user's home, among other things.

The central question for this new product category is not when they will take off, but which devices will rise to the top. To answer this question, BI Intelligence, Business Insider's premium research service, surveyed our leading-edge consumer panel, gathering exclusive data on Amazon's recently released Echo Show and Echo Look, as well as Apple's HomePod.

Peter Newman, research analyst for BI Intelligence, has put together a Smart Speaker report that analyzes the market potential of the Echo Look, Echo Show, and HomePod. Using exclusive survey data, this report evaluates each device's potential for adoption based on four criteria: awareness, excitement, usefulness, and purchase intent. Finally, the report draws some inferences from our data about the direction the smart speaker market could take from here.

Here are some of the key takeaways:

Amazon's new Echo Show is the big winner — it has mass-market appeal and looks like it will take off. The combination of usefulness and excitement will drive consumers to buy the Echo Show. The Echo Look, though, seems like it will struggle to attract that same level of interest.
Apple’s HomePod looks likely to find a place in the smart speaker market but won’t dominate its space like the iPhone or iPad did.
The smart speaker market will evolve rapidly in the next few years, with more devices featuring screens, a variety of more focused products emerging, and eventually, the voice assistant moving beyond the smart speaker.

In full, the report:

Showcases exclusive survey data on initial consumer reactions to the Echo Look, Echo Show, and HomePod.
Highlights the aims and strategies of major players in the smart speaker market.
Provides analysis on the direction this nascent market will take and the opportunity for companies considering a move into the space.

To get the full report, subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

You can also purchase and download the full report from our research store.

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