How the Future of Voice Search Affects Marketers Today

Written by guest author Lindsay Boyajian at Conductor

Since Amazon announced its acquisition of Whole Foods, the running joke across social media has been, “Jeff Bezos said to Alexa, ‘Buy me something on Whole Foods,’ and Alexa bought Whole Foods.”

This quip highlights the shortcomings that plague voice search. Today, voice recognition technology is very much flawed and often falls short in delivering on the user’s intent.

Despite its weaknesses, voice search is promising to be the user input of tomorrow. The major tech companies are investing heavily in the technology— Apple has Siri, Amazon has Alexa, Google has Google Assistant, and Microsoft has Cortana. Even with the technology in its nascency, Google reports 20 percent of queries on its mobile app and Android devices are voice searches.

And thanks to artificial intelligence and machine learning, voice search is improving quickly. It improves with every user interaction, becoming more apt at understanding user intent. With the technology advancing, more users will adopt voice search, fueling the growth cycle.

The work that is going into voice recognition technology today will power the next evolution in computing— augmented reality.

Augmented Reality & Voice Search

Augmented reality (AR) represents a new computing paradigm. Augmented reality overlays digital assets on the real-world environment. The technology promises to change how users interact with the digital world.

Soon, everything from office activities to shopping will be experienced through augmented reality. For instance, a shopper will be able to put on a lightweight pair of AR glasses to visualize in 3D what different couches will look like in her home. Some AR experiences like this are already offered today through head-mounted devices like Hololens and Meta. However, these devices are only available to developers and still have their limitations. They are not ready for mass consumer adoption.

The principal user input for augmented reality devices (excluding hardware input accessories like keypads and clickers) is gesture and voice. The issue with gesture controls is user discomfort and fatigue. Many experts agree that voice will be the primary input for these devices.

As the augmented reality space matures so will the importance of voice search.

The tech company with the most advanced voice recognition technology will have an advantage in augmented reality computing.

Optimizing Organic Search for the Future of Voice Search

Although mass consumer adoption of AR hardware is still years away, brands that optimize for voice search early will lead in organic and search marketing when the technology becomes ubiquitous.

Voice search behavior differs from traditional search patterns. Consumers approach voice search using natural, more conversational language. The queries are often longer and delivered as questions.

The result for marketers is that content optimized only for keywords will falter, while content that delivers value and matches the intent of the user will see improved organic search performance. To do this, marketers need to develop a deeper understanding of their customers to deliver content that provides relevant and timely value. This approach to marketing is known as customer first marketing.

Customer first marketing is not new. More and more brands are quickly adopting a customer-centric marketing approach. Relevant and contextual content drives traffic, fosters customer engagement, and builds loyalty. The rise of voice search and its link to the future of augmented reality only makes adopting a customer first marketing strategy even more advantageous for brands and marketers.

This piece originally appeared on LinkedIn. For more, follow Lindsay Boyajian on Twitter and LinkedIn

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Robotics Software and Services is Where the True Value Lies

We recently published a six-part series on the future of robotics including a detailed outlook through 2025 on the five major robotics categories: IndustrialCommercialDomesticMilitary, and Social. Each part highlighted our thesis, outlook and market size for each category of robotics hardware, but we expect robotics software and services to be even larger.

In total, we believe the robotics hardware market will grow from $20.9B in 2016 to $73.0B in 2025, representing a 14.9% 10-year CAGR. However, our estimate only includes hardware sales, not software or other supporting services for robotics. When factoring in these additional markets, we believe the total robotics market value could be 3x larger including $73B in hardware plus $140B+ in software and services. We believe the hardware and components used for robotics will largely be commoditized over the next 10 years. Differentiated hardware will be the exception to the rule and unique value will be driven by software and services.

Advancements in software, including robot control software and data analytics platforms, will be key to improving robot functionalities and, in-turn, drive further adoption. For example, an unmanned traffic management platform to track robots that move autonomously in society will be crucial to large scale deployment of robotics. We view traffic management as one of the more attractive investment opportunities in the robotics space. We also believe robotics as a service (RaaS) will continue to gain momentum and we view this business approach as an attractive value proposition for business of all sizes. In the paragraphs below, we dive deeper into key robot software platforms, as well as robotic services driving growth across all five robot markets.

Robot Control Software

Programming a robot is one of the most challenging, costly and time-consuming tasks involved in creating an autonomous machine. Few companies that employ robotics will build proprietary control software from scratch. Most will lean on standardized, open-source robotics operating platforms to program robots. The Open Source Robotics Foundation has developed the Robot Operating System (ROS), which is a collection of tools to simplify the task of programming robots across a wide variety of platforms. ROS has become the preferred platform for programming and it has significantly accelerated the number of robotics companies coming to market. However, due to advancements in computer vision and artificial intelligence, companies are developing more efficient and cost effective ways to train robots. Because of lower costs and smaller form factors of 3D cameras, LIDAR and RADAR sensors, robots can better understand their surrounding environment. Coupled with machine learning mechanisms, these new technologies are allowing robots to learn on their own. A future in which robots are self-taught in real-time is still many years away, but we believe further advancements in artificial intelligence will significantly narrow this gab and allow robots to become more human-like.

Data Analytics Software

Due to the advanced sensors that robots carry, machines are gathering incredible amounts of valuable data every day. We believe one of the most attractive investment opportunities in the years to come will be companies capable of taking this data and turning it into actionable insights for businesses to improve efficiencies and productivity. Providing enterprises with affordable, real-time intelligence will be a game-changer for many and a driver of robot adoption. In robotics industries, such as the commercial drone market, early adopters have quickly focused less on the drone hardware and more on the data gathered by the drone. We believe that over time this data-focused shift will continue, and robots will be seen as automated data collectors in many industries. Today, it can take days to remotely process data from robots. Cloud computing is helping to process these large data sets, but leaders in the industry will need to be able to process the data in real-time onboard the robots and provide businesses with answers immediately.

Unmanned Traffic Management Software

For robots to be deployed at scale and operate autonomously within society, we believe an unmanned traffic management platform for air, ground and sea is required. In the near term, we believe the focus will be on implementing a drone traffic management system that provides situational awareness for other drone operators and manned aircraft pilots. Unmanned aerial vehicles are used in a growing variety of applications. By 2020, we expect over 400K commercial drones will be sold annually. For manned aircraft and drones to operate together, both will need to be able to communicate on a common platform, which will allow drones to fly regularly beyond visual line of sight. Amazon and Alphabet are both working on proprietary drone management systems, but we’ve seen a handful of smaller companies working on sophisticated software platforms and believe there will be many different services available to provide situational awareness to the aircraft community. Leaders in the space will be able to support management of drone operators, which will include flight planning, flight approval, tracking as well as remote identification. We believe similar tracking systems should also be in place for ground and marine robots, but a system that works for air, land and sea vehicles in conjunction may be the ultimate goal.

Robotics as a Service

While advancements in software are improving robot functionalities, new services will also be a growth catalyst for the industry. Given certain robot-related costs remain high, many companies are starting to offer robotics as a service (RaaS) for more business to benefit from the advantages of robot technology. This model allows for customers to either lease robots and/or the RaaS provider will visit the customer to perform a specific task with a robot and provide the customer with the data gathered. For example, this service model is common within the commercial drone industry, where businesses may not have the pilot expertise to operate a drone and, in the end, the drone user is primarily after the data gathered. We believe robotics as a service (RaaS) is gaining momentum across multiple robotics domains and we view the offering as an attractive value proposition for business of all sizes.

Delivery Robots

Package delivery via drone or ground robot represents one of, if not the, largest opportunity for robotics services. While we do not see robot package delivery being deployed at scale for at least five years in the US due to current regulations in place, we believe package delivery is real and represents a multi-billion-dollar market opportunity.  While most package delivery will be by drone, we see a meaningful opportunity for ground robots to also participate. To allow packages to be delivered by a robot, we believe 2 things need to occur over the next couple years: First, the US and other countries need to implement favorable regulation to allow drones to fly over people and beyond visual line of sight. Second, we believe an unmanned traffic management system needs to be put in place allowing all stakeholders to track all robots in use. Both issues will eventually be resolved in the US, but due to more favorable regulation internationally, we believe robot deliveries could occur much sooner in foreign markets.

Bottom Line

We estimate that robot hardware will represent a $73.0B market opportunity by 2025; however, we believe many robots will be commoditized over time. Instead, the sustaining value add in robotics will come from software and supporting services. For that reason, we believe investing in companies with a software- or service-focused business model will be the more attractive way to play the growing robotics theme given these approaches are more scalable and, arguably, more defensible. We believe the largest software opportunities will be companies that improve the speed at which robots learn, as well as companies turning the data gathered from robots into actionable insights companies can use to improve efficiencies and productivity. In addition, we believe companies working on platforms for an unmanned traffic management system is crucial to accessing new multi-billion market opportunities; e.g., drone delivery. We believe advancements in robotics software platforms will be reliant on innovation in artificial intelligence, cloud computing and computer vision. With regards to services, we believe the RaaS model is gaining momentum, allowing more businesses to adopt robot technologies.

We believe a cultural shift is underway and robots are playing an increasingly crucial role in our everyday lives. Improvements in robot hardware, software and services will positively impact the industry and drive robot adoption globally.

Austin Bohlig contributed to this note. 

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Bad Culture Doesn’t Scale

The most important lesson from Uber’s travails is that bad culture doesn’t scale. Talented teams with bad culture can build fantastic businesses, but not businesses that last. A unicorn with bad culture is a unicorn with a bomb strapped to its back — it’s only a matter of time before bad culture catches up and forces disruptive change. Sometimes bad culture rears its ugly head quickly, as it did with Zenefits. Sometimes it doesn’t happen until after multi-billion dollar per year business is established, as it did with Uber.

The culture at Uber wasn’t a secret. It had always been known as an aggressive one, and that culture deserves some credit for helping Uber transform the ride hailing industry; however, the bigger and more established a company becomes, the harder it is to maintain bad culture. Rumors spread, lawsuits happen, and good hires leave because it wasn’t what they signed up for. The media will report every painstaking detail. Advanced companies like Uber also face public backlash from customers, impacting revenue. If Uber were a publicly traded company, the stock would be down at least 30% in the past month given the CEO turmoil. Maybe down 50% for the year adding in the Google lawsuit and other well-publicized troubles.

During our time as public equity analysts, we’ve had the opportunity to cover some great, lasting companies like Apple, Amazon, Google, and Facebook. A common thread between all four of those companies is great culture. When Steve Jobs passed away, we wrote that his greatest achievement wasn’t the iPhone, the iPod, or the Mac, but Apple itself. He left behind a culture of good people driving revolutionary innovation. That might sound simple, but not compromising on your values and consistently hiring the right people that share those values is hard. It’s especially hard for a startup trying to build quickly while bearing the pressure of venture investor expectations.

It’s hard to determine the long-term fallout of Uber’s culture problem. The company has “verbed” itself, much like Google, which allows it a significant brand advantage. One of our teammates has joked that he would, “uber us a Lyft.” With broad leadership change, including the departure of its CEO, Uber has a chance to grow new roots and overcome the negative culture that’s now detracting far more than it ever added.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Amazon Is Building The Future of Retail by Rebuilding The Past

Earlier today, Amazon announced that it has agreed to buy Whole Foods for $13.7B, supercharging Amazon’s food effort. The market for groceries is roughly $500B, of which Amazon will immediately own $15B. Amazon is expected to do a total of $180B in total retail sales in 2018, but could exceed that number as it builds on its grocery platform.

In our piece on The Future of Retail we identified three viable categories in the future of retail: 1) Online Shopping; 2) Automated Brick & Mortar; 3) Empathic Offline Retail. And we think Amazon gets it:

They’re playing the long game, aggressively denying short term gains to establish itself as the owner of the operating system for commerce in the future. But Amazon also gets the fact that not all retail is best suited for the internet, which is why we’ve seen them dabbling in automated brick & mortar concepts.

With its purchase of Whole Foods Amazon is taking another big step forward in its attempt to lead in all three categories.

1. Online Shopping. Check. Amazon is already the clear leader.

2. Automated Brick & Mortar. The Whole Foods purchase positions Amazon to experiment with concepts like Amazon Go in a big way, pushing forward its efforts in automated brick and mortar. As we wrote previously:

This automated model works best for commoditized goods from large chain retailers and grocery stores where price is the primary selling point. Categories in which personalized service, a unique experience, and technical expertise matter less. In these commoditized categories, reducing human overhead means lower prices, which will help retailers defend their territory.

Amazon Fresh was previously available in close to 20 cities in the US. Whole Foods gives Amazon an additional 456 brick & mortar locations from which it can test automated concepts.

3. Empathic offline retail. Whole Foods is arguably one of the best grocery experiences built for scale, leveraging three uniquely human capabilities: creativity, community, and experience.

When it comes to integrating Whole Foods into Amazon’s current efforts, we see the first step as the addition of 1-hour delivery, through Amazon’s Flex network, from Whole Foods. This is likely to take 1-2 years before it is implemented across the entire Whole Foods store base. Next, we see the Amazon Go concept being integrated, although it will be some time before it’s rolled out on a larger scale. We don’t expect Amazon Go to be widespread until at least 2021.

The degree to which Amazon succeeds in each of these three categories is the degree to which they will be the dominant operating system of retail in the future, and they are well on their way. And Amazon sees the synergies between these categories. Whole Foods’ physical assets (real estate, warehousing and distribution capabilities, etc.) will accelerate a retail flywheel for Amazon to expand their brand as the everything store, available everywhere consumers think to shop.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

The Future of Retail

It’s no secret that online retail is slowly killing offline retail.  In Q4 2016, 8.3% of total US retail sales were online (about $103 billion), up from 5.1% just five years ago (about $53 billion). Offline sales were 91.7% of the total, about $1.1 trillion. We don’t typically talk about the percentage sales that happen offline, but it’s powerful to see how large that market remains. The longer-term question is: how much of total retail will eventually happen online?  We looked at the breakdown of US retail sales by category excluding gas and restaurant expenditures. Based on our analysis, we believe that 55% of total retail sales will eventually happen online, leaving 45% of retail sales for the offline world. But how will brick & mortar retail defend its territory?

We believe the answer lies largely in a combination of artificial intelligence and robotics.  Where AI and robots are superior to humans in terms of efficiency, logic, and raw productivity, we believe humans will remain superior at creativity, community, and experience. Machine-driven retailers are uniquely qualified for convenience, speed and selection. Human-driven retailers are uniquely qualified to create personalized service based on empathy.

Human retailers are uniquely qualified to create personalized service based on mutual understanding – empathy.

The degree to which retailers are successful in leveraging creativity, community and experiences in their stores is the degree to which they will be successful in defending their businesses against online commerce and automated retail.

Given that backdrop, we see the future of retail delivered in three ways:

  • Online Shopping
  • Automated brick & mortar
  • Empathic offline retail

The Future of Online Shopping. Our analysis of US retail sales by category leads us to believe that 55% of total retail sales will eventually happen online. The consumer benefits of convenience, quick shipping and expansive product selection are too powerful to slow the gains that online shopping is enjoying at traditional retail’s expense. Amazon gets it, and they’re playing the long game, aggressively denying short term gains to establish itself as the owner of the operating system for commerce in the future. But Amazon also gets the fact that not all retail is best suited for the internet, which is why we’ve seen them dabbling in automated brick & mortar concepts. More on this below.

More immersive buying experiences will be a major driver of further gains for online shopping. Specifically, augmented reality and virtual reality will allow shoppers to experience a product in lifelike ways before they purchase it. Test out a new outfit in VR and get feedback from your friends. Show your significant other the new couch in your living room with AR before you order custom furniture. The likelihood of returns goes down, customer satisfaction goes up, and so too does the share of online retail.

The Future of Automated Brick & Mortar. We also expect a portion of retail to move to an automated model with few if any employees.  Stores will be monitored by computer vision systems. Shelves will be stocked by robots. Customers will be helped by service robots that understand natural language.  Checkout may resemble Amazon Go where customers simply walk out with their purchases. We’ll likely see the lines between online shopping and automated brick & mortar blur as some stores become more like warehouses for delivery personnel or delivery robots.

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