Amazons alexa the latest example of a tech major going over the top

Amazon’s Alexa the latest example of a tech major going “over the top” to lock in customers

Technology breakthroughs often focus on new operating systems or major semiconductor developments.

But one of the most significant yet under-reported trends is for technology companies to try to 'leapfrog' each other with 'over-the-top' technologies. It is this trend that often defines the battle for supremacy in the technology industry.

A technology goes 'over-the-top' when it is deployed on top of existing hardware and software, coming a key step closer to the end user. Because this new technology then controls the user experience, and grabs mind-share, it renders technologies below it far less valuable, and in time, turns them into mere commodities.

The latest example is Amazon’s introduction of Alexa, its AI-powered ‘virtual assistant in a box.’ Alexa aims to go over the top of Google’s dominance on the web, and Apple’s dominance on the smartphone, to create a new point of engagement with users, which replaces both, rendering Google ‘invisible’ to Alexa users. Google becomes immediately less important, and less valuable. Same for Apple; ‘asking the box’ replaces checking the iPhone. For Amazon it is a brilliant way of going over the top rather than trying to build a better phone or expand its web experience.

First over-the-top

Alexa is but the latest in a long, and illustrious, line of over the top efforts that have defined the industry. Modern technological development has largely been driven by this desire, and has made certain investors and entrepreneurs into billionaires in the process. It all started with IBM and Microsoft.

When IBM shipped Microsoft's early operating system with each of its PCs, it effectively paid Microsoft to go over the top of IBM's huge investment in computers. Over a brief period, Microsoft gained so much control over users that it turned IBM's core technology into a near commodity. We are still seeing the remnants of this today, with sub-$300 PCs and PC makers having near-zero profit margins.

After trying and failing to kill Windows with OS/2 (remember OS/2?) IBM realised its mistake, and tried to go over the top of Microsoft itself. It spent over $4bn buying software firm Lotus because it wanted a small but crucial part of the business: Lotus Notes, with a revenue stream then of only $100-200m. What was IBM's reasoning? Lotus Notes would become the main user interface, sitting on top of Microsoft's Windows operating system, and turning Windows into a commodity, just as Microsoft had done to IBM.

It did not quite work out as planned, but for the potential of going over the top IBM was prepared to pay billions. But it illustrated dramatically how valuable over-the-top technology can become.

Replacing Google

The same trend has played out in recent years. Even the prospect of successfully going over the top is enough to drive huge prices for nascent companies, and massive investment by tech majors.

Before Alexa was created, Apple bought Siri - then a tiny development company - for a reported $200m, intending the mobile assistant app to rival search engines (meaning Google). It was of course Apple’s own attempt to go over the top of web players. Users could look up info via Siri's speech recognition software - instead of using the Google search box. Even partial success will mean tens of billions in value to Apple, and billions lost by Google; an astonishing price for a tiny start-up is loose change in comparison.

Amongst European companies, Skype's move into Wi-Fi is another case of going over the top, this time of mobile operators. When users click the Skype app to access wireless networks, they engage with Skype, not T-Mobile or BT. Skype's value rises, and the value of billions invested in wireless capacity slowly reduces.

Skype, incidentally, is now owned by Microsoft.

Web interface

Facebook, in recent years, has perfected the art of going over the top, eventually doing so to itself.

Facebook did not start out as an over-the-top technology, but by becoming the main source of news and info for a generation it has rendered all other web content companies (Yahoo and AOL for example) far less valuable. Once it cracked mobile, Facebook demonstrated it could go over the top on the most important platform, and its market value accelerated from below $100B to over $300B in a very few years.

Even more interesting is Facebook’s Instagram purchase. Facebook faced the prospect of Instagram going over it to engage billions of users directly with images, something Facebook hadn’t perfected. By paying an astonishing $1B for 15 person Instagram, Facebook bought it’s over the top competitor, and in effect (and brilliantly) went over the top of itself.

The next big thing?

The battle has since shifted to virtual reality/augmented reality and virtual assistants as the two key battlegrounds now being fought over.

Once again Facebook has made an over the top move buying Oculus, to be the first point of engagement with consumers using VR. And in virtual assistants, a retailer has stolen a march on the two big tech giants. To fight back, Apple is frantically improving Siri, and Google is making a massive push in AI and has cleverly released the Pixel phone to help train its AI engines on user behaviour ‘in the wild’.

But being first in virtual assistants has a major benefit. The longer Alexa operates ‘in the wild’ and the greater the sales volumes, the ‘smarter’ Alexa’s brain will rapidly become.

Is this the ultimate over-the-top technology?

If history is any sort of guide to the future, almost certainly not.

Google Plus
Vk
LinkedIn
Pinterest
{{ message }}

{{ 'Comments are closed.' | trans }}