Google Home Takes On Amazon Echo With Shopping Support

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Google-parent Alphabet (GOOGL) has expanded its grocery delivery business to fresh produce and set up online ordering through its voice-activated home speaker system, taking on (AMZN) on two new fronts.

Google Express, the delivery business, will offer fresh produce initially in parts of Los Angeles and San Francisco. Google Express has partnered for fresh produce with Costco (COST), Whole Foods (WFM), and other retailers. Google Express will compete with Amazon Fresh, FreshDirect, Safeway and Instacart. While Amazon Prime Now also has retail partners, Amazon Fresh has its own warehouses.

Google Express annual membership costs $95. Amazon in October changed its fee structure. Amazon Fresh costs $14.99 monthly for Amazon Prime members, and a Prime membership costs $99 a year.

Google has also added shopping support to its Google Home internet-connected speaker system, which competes with Amazon’s Echo smart-speaker system. Products, however, will only be available from Google Express partners, which include retailers such as Walgreens Boots Alliance (WBA) and Bed, Bath Beyond (BBBY).

Amazon has sold more than 8.2 million Echo home speakers, says Consumer Intelligence Research. Google-parent Alphabet launched its artificial-intelligence-supported home speaker system last fall, but it hasn’t disclosed shipments. Both Amazon’s Echo and Google Home are voice-activated.

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“Measuring up to Amazon in this category is going to be tough because Amazon has one system through which millions of products are available globally, whereas Google will have to sign up lots of retailers in every locality where it aims to have this service available,” said Richard Windsor, an analyst at Edison Investment Research, in a report.

“However, when it comes to almost all of the other features, Google Assistant is capable of offering a vastly superior user performance than Amazon Alexa,” he wrote. “This is because the AI that powers Google Assistant is top of the class, while Alexa’s is second rate at best.”

Edison Investment estimates that Alphabet has sold 500,000 Google Home devices. Google Home sells for $139, about $50 less than the Echo.

Amazon stock hit an all-time high of 847.27 on Friday, ending the day at 845.07, up 0.11%. It’s in a buy zone from a breakout Wednesday at 843.94.

Alphabet stock, which hit its high of 867 on Jan. 27, rose 0.52% Friday to 846.55. Like Amazon, it too is in a buy zone from its breakout last month at 839.10, as the FANG stocks in general have been doing well of late.

Amazon and Alphabet are racing to add more features to the internet-connected home devices. Both Amazon and Google reportedly are working on technology that could turn their voice-activated home speaker systems into phones. It’s not clear if telecom regulations would get in the way of Amazon’s Echo or Google Home adding such features.

Observers also speculate that Amazon’s plans for paid search on its popular Echo devices could pose a threat to Google’s core advertising business. At an advertising industry meeting on Jan. 19, a top Amazon executive signaled plans for paid search.

Google was asked about voice-based search on its Q4 earnings call on Jan. 26. Google CEO Sundar Pichai said: “We expect voice to work across many different contexts. So we are thinking about it across phones, homes, TVs, cars, and, you know, trying to drive that ecosystem that way.”


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