Richard Windsor
9 October 2017

Amazon & Microsoft - One way street

Amazon gets the best of it for now.

Amazon looks to be the main beneficiary of the co-operation between Amazon and Microsoft which will see Alexa offer access to Cortana and vice-a-versa. Amazon and Microsoft are working on a co-operation where Windows 10 users will be able to get Cortana to open Alexa and perform its range of functions. Users of Amazon Echo products will also be able to ask Alexa to open Cortana and ask it to perform its various actions. The idea is that users get another easy conduit from which to access Alexa while Cortana is provided with a badly needed escape from the PC where it has been stuck since the collapse of Windows Phone. Cortana was originally designed to operate on a mobile device and consequently was taught how to work in a range of domains that are used on mobile.The problem is that most of these domains are irrelevant on a PC and as a result, Cortana is fairly useless where it is predominantly present today. This is exacerbated by the fact that Cortana has not really been taught how to work with the Office applications making the user experience for its main use case on a PC pretty poor. For example, asking Cortana to read my email results in a Bing search for “read my email” and it is quicker and easier to open documents in Office with a mouse than to ask Cortana to do it.

Microsoft’s artificial intelligence is actually better than Amazon’s as a result of the data it has been crunching via Bing but very little of this has found its way into Cortana. Consequently, Amazon has come up with a better product that is far more useful in the environment where it is present (speakers in kitchens and living rooms). Hence, we don’t see much of a use case for Alexa users to begin asking Cortana to do things but having access to Alexa via a PC could prove to be quite useful. This is particularly the case as Alexa is very good at shopping and controlling the smart home potentially making device control remotely from the office much easier. As a result, Amazon is the main beneficiary of this collaboration in the first instance.

However, if Microsoft’s AI continues to be better than Alexa’s then there is scope for a much deeper collaboration where Microsoft’s AI could be used to power some of Amazon’s services. The only problem here is that this could result in cross over between Microsoft and Amazon Web Services who are fierce competitors in the cloud. Hence, a deepening of this collaboration looks unlikely at the moment but may become a reality if Amazon’s AI continues to languish.
Although Amazon appears to have gotten the better of this deal, we still cannot stomach the valuation leaving us with a strong preference for Microsoft’s shares.

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