Now that the dust has settled on the holiday shopping season, is seems Amazon.com, Inc. (Nasdaq: AMZN) scored a huge victory with its Echo home smart speaker. Smart speakers and connected homes are popular themes in technology at the moment, and GBH Insights head of technology research Daniel Ives says Amazon now dominates the market.
According to Ives, Amazon Echo now makes up about 75 percent of the smart speaker market. With more than 25 percent of searches now being done via voice-enabled devices, Ives says Amazon, Alphabet (GOOG, GOOGL) and Apple (AAPL) all recognize the incredible growth opportunity connected homes represent.
Ives says device sales are just the tip of the iceberg.
“The trifecta of Alexa, Echo, and Prime should enable Amazon to further penetrate the consumer, expand Prime membership and retail spending patterns, while widening the company’s consumer competitive moat, in our opinion, for 2018 and beyond,” Ives says.
But just because Amazon has jumped out to a commanding lead in the early smart speaker market doesn’t mean investors should expect smooth sailing ahead. Ives says Google Home will likely be one of the top marketing priorities for Google. In addition, Apple is expected to launch its HomePod device sometime in the first half of the year.
Ives says artificial intelligence, augmented and virtual reality, autonomous vehicles, 5G wireless technology and digital health all represent growth opportunities for Amazon and other tech leaders in coming years. However, connected homes may be the largest opportunity of all.
“While all these areas represent major tech trends for 2018 and beyond, the ‘star of CES’ in our opinion will be Amazon/Echo and its white-hot Alexa smart home ecosystem, as we believe this represents a $20 billion market opportunity for Bezos & Co. over the next three years,” Ives says.
Ives isn’t the only one bullish on Amazon in the long term. Citi analyst Mark May says Amazon remains one of the best opportunities in the market.
“If taking a long-term perspective (e.g., 3-plus years), then AMZN should arguably be the top-ranked company and stock in the internet sector,” May says.
Citi has a “buy” rating and $1,400 price target for Amazon. GBH has…
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