What Alexa & AI Means For The Future of Commerce

Amazon has always been at the forefront of Internet innovation, including Artificial Intelligence. I'm not just talking about Alexa, Amazon's intelligent assistant and perhaps the most impressive consumer technology of 2016. Amazon also utilizes AI in its core product: the personalization engine that drives Amazon.com. Whenever Amazon's website recommends an item to you (e.g. "Customers Who Bought This Item Also Bought"), part of the technology behind that is AI. More specifically, deep learning via neural networks.

Indeed, with the popularity of Alexa this year and its continuing dominance in e-commerce, Amazon has arguably been the most successful of the tech companies at commercializing Artificial Intelligence. Google, for all its promise, has yet to deploy AI in a big way outside of its search engine. Apple's Siri never reached its potential. Microsoft has had mixed results with AI. Facebook's AI backbone is an impressive feat of engineering, but it only impacts certain things in the News Feed (such as organizing images). Whereas Amazon's recommendation engine is the core of its retail experience.

When it comes to making 'smart' consumer Internet products, Amazon just seems to have an edge. Which is why things look good/ominous (depending on your point of view) for Amazon's retailing future. Allow me to explain...

Amazon's AI Destiny

The technology behind Amazon's recommendation engine was open-sourced in May of this year. It's called DSSTNE (pronounced: destiny), which stands for Deep Scalable Sparse Tensor Neural Engine. "We use DSSTNE to train neural networks and generate recommendations that power various personalized experiences on the retail website and Amazon devices," Amazon engineer Kiuk Chung wrote in a blog post.

It's important to note that Amazon only recently started using AI in Amazon's product recommendations. DSSTNE was developed in 2014, according to a presentation in July by its lead developer Scott Le Grand. In a separate comment on Hacker News, Le Grand said that it was created "specifically for product recommendations from Amazon's catalog."

Before 2014, Amazon's recommendations came from a technique known as "item-to-item collaborative filtering." In a January 2007 post on ReadWriteWeb (the blog I used to run), Alex Iskold analyzed some of the ingredients Amazon used in its recommendations: item relevance, personalization, and social signals. With DSSTNE, we can assume that Amazon made the system much smarter. Hopefully that means avoiding some of the glitches of the past, such as recommending more Ronan Keating CDs if you happened to buy your mother one for her birthday.

It's also worth noting that while DSSTNE has been open sourced, Amazon's vast and proprietary data set hasn't. Or as Le Grand put it, Amazon hasn't released "the actual networks, and definitely not how they prepare customer purchase histories." The truth is, Amazon is supremely confident that no other online retailer can come close to matching its retail database. Therefore no other company will do recommendations as well, even if it uses DSSTNE. So there was little risk in Amazon open sourcing this technology, but there's big potential upside. Amazon is hoping an external developer will extend DSSTNE in unforeseen ways; and thus give it an even bigger edge in online shopping.

Upskilling With Alexa

If DSSTNE sounds like the name of an obscure rapper, Alexa sounds like the next big pop music sensation after Beyoncé. And sure enough, Alexa has been Amazon's star performer in AI.

Alexa doesn't use the DSSTNE framework, according to Amazon executive Rohit Prasad. Instead it uses its own speech recognition system. While that technology hasn't been open sourced, Alexa has launched a couple of platforms for third party developers to tap into. One is the Alexa Skills Kit (ASK), a collection of APIs and tools that allows developers to build new functions into the Amazon Echo.

Think of Alexa "skills" as akin to apps on a smartphone. There are now over 1,900 third party skills for Alexa (you can search them all here). One example is Honeywell's Wi-Fi Total Connect Comfort thermostat, which you can control using voice commands. Just say "Alexa, set home temperature to 72" (or 22, if you live in my part of the world) and the temperature adjusts without you having to get up from the sofa.

Alexa Voice Service (AVS) is another third party platform for Alexa. It gives hardware makers a toolkit to integrate Alexa into their Internet-connected devices. It is early days for this service, but one example I found is Petnet. This company created an automatic feeder for cats and dogs, called SmartFeeder. According to ProgrammableWeb, "customers can use the [Alexa-powered] voice-activated assistant to ask specific questions about their pets feeding activities and manage other aspects of pet feeding." (One of our cats caught a bird yesterday, so I would've loved to ask him how he did that - but I don't think that's what SmartFeeder does...)

Alexa, What Should I Buy?

The reason why Alexa has captured so much of our attention this year is because it has that rare combination of utility and a magical user experience. Tim O'Reilly wrote a great analysis of Alexa, calling it "the first winning product of the conversational era." In particular, he showed how Alexa is far superior to Google's equivalent voice interface, Google Now. That's spot on, but I think there's another angle to Alexa too: shopping conversations.

I'm willing to wager that Alexa will increasingly be your go-to source for conversations about what to buy. Think about how hard it is to choose a new TV. I'm in the process of doing that right now, and even with The Wirecutter and CNET's help I still find all the choices and features overwhelming. It'd be great to have an automated assistant to ask questions to and help me whittle down the choices. Alexa is self-learning, so over time she'll develop the knowledge required to be your shopping assistant. Many times, she will point you to an item that just happens to be available on Amazon.com. Ok, other retailers will presumably tap into Alexa as well, through the third party services - but Amazon has a head start and will probably do it better.

Let's face it, Amazon is amazingly good at stealthily coming to dominate everything retail. So it's reasonable to assume that Alexa is another weapon in Amazon's e-commerce arsenal. Of course it'll be used for much more than just buying stuff, but you watch: Amazon will soon have a conversational interface direct to your wallet.

2 thoughts on “What Alexa & AI Means For The Future of Commerce”

  1. Each December going back to 2004, I’ve done a year in review blog post about technology. This year I’m focusing on technology trends rather than specific products. But I’ll mention many of my favorite tech products as part of the review.
    In time, we may look back on 2016 as the beginning of the big shift away from mobile phones. Why? Because much of the innovation in 2016 happened in product categories like Virtual Reality, Artificial Intelligence, Automation, Wearables, and Internet of Things (IoT). In those categories, the mobile phone typically isn’t the primary device (although it’s often a supporting or connecting device – at least for now). In VR, headsets such as Oculus Rift or HTC Vive are the primary devices. With wearables and IoT, the primary device is either attached to our body or integrated into our environment. And while consumer AI is sometimes phone-based (for example, Siri), usually it’s either device-less (like IBM Watson) or a bold new type of device (like the Amazon Echo). As these trends continue to evolve, eventually we won’t need smartphones at all. But I’m getting ahead of myself. Let’s look at the trends of 2016 that started this gradual shift…
    1. Virtual Reality Becomes Reality

    After decades of hype, 2016 was the year that VR arrived as a consumer product. Three major VR headsets were released this year: Facebook’s Oculus Rift in March, the HTC Vive in April, and Sony’s Playstation VR in October. All helped make VR a reality this year. On the down side, we learned over 2016 that compelling VR content hasn’t arrived yet. Especially if you weren’t already an avid gamer. Also the level of presence – that feeling of truly believing you’re in an alternate reality – has a long way to go for the current crop of devices.
    But at least VR is a real, commercially viable technology now. Not to mention it has inspired certain science fiction authors to speculate about where it might take us in the future.
    2. Conversing With Artificial Intelligence

    AI has been evolving at a steady clip for many years now, but until now there hasn’t been a breakthrough consumer AI product. In 2016 it became clear that Amazon Echo was that product; it was released outside of the US for the first time this year. The idea is that you talk to the Echo device via a voice service called Alexa (Amazon calls Alexa “the brain behind Echo”). This may prompt comparisons to the infamous movie AI, HAL 9000, in Stanley Kubrick’s movie 2001: A Space Odyssey. Luckily, so far there haven’t been any reports of a rebellious Alexa, although it did make a couple of guest appearances this year in the dark (and brilliant) tv show Mr Robot.
    Alexa is a form of intelligent assistant, a product type that Google, Facebook, Microsoft and others are all exploring. A related trend over 2016 was the rise of ‘chatbots,’ which are integrated into Instant Messaging apps. What they have in common with Alexa is their conversational interface. Facebook began experimenting with chatbots this year in the Messenger app, in an attempt to catch up to its more sophisticated Asian competitors.
    3. Social Media Jumps The Shark

    2016 was the year “selfish media” finally went too far. Whether it was fake news, filter bubbles that prevent people from seeing (let alone understanding) other viewpoints, over-sharing people dominating our feeds, the outrage culture that permeates the media, or simply the overwhelming flow of blinkered opinions we get every day on social media… I’ve had enough. I’ve already begun to dial down my social media consumption.
    It’s not all bad, of course. I still enjoy keeping in touch with family and friends on Facebook, and Twitter is useful for tracking narrowly defined interests. But social media proved in 2016 that it is not a viable news platform – at least if we want truthful and open-minded discussions. Bring back blogs in 2017?
    4. Society Begins To Tackle Automation

    We’ve only just started the conversation about how to transition to an economy which is heavily automated. In 2016, there were multiple warning signs of the potential impact. Take Uber, for example. The popular ride-sharing app began actively trialling driverless Uber cars in 2016. It’s likely that Uber’s driverless car fleet will eventually take the jobs of tens of thousands of human drivers – and that could easily happen within a decade. What will all those drivers do next?
    This conversation is less about the technology itself, than it is about finding solutions to what automation will do to our working culture. That could mean implementing a Universal Basic Income, or people becoming more creative in how they earn an income. We don’t yet know how to deal with increasing automation. But it’s an important topic and in 2016 we, as a global society, at least started talking about it.
    5. Pokémon GO & The Dawn of Augmented Reality

    I couldn’t do a review of 2016 without mentioning Pokémon GO, which had an extraordinary burst of popularity over July and August. Without a doubt the killer app of this year, Pokémon GO brought Augmented Reality (AR) into the mainstream. At one point it seemed like every kid in my city was chasing cartoon characters down the street. And the irony, at least for me? Pokémon GO was a smartphone app. So mobile phones are not dead yet!
    Conclusion
    Ultimately, I think Pokémon GO was an outlier this year. I look back on 2016 as the year in which Internet technology went well beyond our mobile phones. Whether it was VR headsets in our lounges, Alexa in our living rooms, or driverless cars being tested on our roads, 2016 expanded the scope of what it means to be ‘online’ (or ‘invirt’ as I put it in my VR novel). I expect to see more of this expansion in coming years.
    So when will the smartphone lose its status as our primary Internet device? Probably not for many years. However, perhaps this generation of teenagers will be the last to walk around with their necks craned downwards, staring at a small rectangular screen.
    Lead image: Wired

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