Why Amazon's Echo, the smart-home assistant, could launch a whole new device category

Amazon

Amazon's new smart-home device, the Amazon Echo, has been one of the most hyped products of 2015. It can best be thought of as a voice-driven personal assistant - think Apple's Siri or Google Now - but in hands-free speaker form.

The Echo accepts voice commands and performs a variety of tasks, from playing (and purchasing) music, to creating shopping lists, and completing simple web searches.

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In research from BI Intelligence, we test the Echo's capabilities, and analyze its potential as a media, e-commerce, and smart-home device. We also consider its impact on Amazon's ecosystem, and whether hands-free, voice-driven personal assistants will become a popular device category in the connected home.

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Here are some key findings from the BI Intelligence report:

• The Echo is deeply integrated with Amazon's loyalty program, Amazon Prime. The Echo retails for $99 to Prime members and $199 to non-Prime members. The device ties into other Prime-only services such as Amazon Prime Music.
  
• We found the Echo performs well as a voice-activated music player and for very basic internet search queries, but still has a long way to go before it can be effective for shopping and e-commerce or as a full-fledged digital assistant.
• We believe the Echo's full potential could be unlocked if Amazon improves e-commerce integration and opens the Echo to a wider variety of third-party apps. The Echo's voice-purchasing feature, which allows users to initiate Amazon purchases with simple voice commands, points to wider e-commerce tie-ins.

The full report:

• Tests the Echo's music, news, weather, connected home, trivia, and e-commerce features
• Analyzes the potential for the Echo and other voice-driven personal assistants in the connected home
• Examines the current demand for the Echo and how it is outstripping current supply
• Considers the opportunity in smart-home digital-assistant devices
• Provides a forecast of the market for voice-recognition and -processing tech
• Tests the Echo's voice-recognition software on specific queries

For full access to all BI Intelligence reports, briefs, and downloadable charts on the Internet of Things and mobile computing markets, sign up for a risk-free trial membership.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.