We sold 40% devices in tier 2 during Diwali: David Limp, senior VP, Amazon

Amazon has seen an 80% jump in sale of its devices during the Diwali festive season, with nearly 40% of that sold outside the metros. There has also been growing acceptance of its Alexa voice services in Hindi, David Limp, senior vice president of devices and services for Amazon, told ET in an interview. In the rest of the world, despite the holiday season being round the corner, products are busily being manufactured and Amazon is at its “peak manufacturing in our business right now,” Limp said. Excerpts:

How is Alexa’s business model going to evolve?
Using Kindle as an analogy, ‘books’ was one business model, but over the last decade, many have evolved, including building much more selection by giving authors the ability to self-publish books. This fuelled the flywheel of the business model of Kindle, because now there’s a lot more selection, there’s a subscription service which is Kindle unlimited. If customers love a product, you can generally figure out a way to turn that into a business model.

Effectively, music in the home had gone away. People were doing music on their personal devices. The advent of Alexa and Echo has brought it back and… (then) came a rise in subscription services in and around music. The second would be smart home. Millions of customers are using Alexa and Echo every day for smart homes. As people adopt them, they tend to buy more capabilities in smart home devices. If you were to go and ask Philips about their bulbs, or Wipro about their light bar in India, they will all tell you that Alexa has (helped) increase by hundreds of percentage points over the last five years the adoption of a smart home plug or light bulb.

Shopping is a perfect example where we’re seeing signs of people adopting voice and that’ll be another great business.

You’ve launched Alexa in Hindi. Will you do the same for others too?
When we launched in English, we recognised that this is a country of many different languages and many different dialects. Even in English, we had to get it to a quality level… to be used throughout India, we had to take many proper nouns, music artists and even then, some proper nouns would have been in Hindi or Tamil. For the next language, we’ll just look to what customers tell us. With Kindle, we added many other Indic languages over time because of feedback.

Do you see more unique use cases for India being developed?
Every country has their unique use cases. A couple of early signs in India are payments, the other one is education. This is a country that makes it such a high priority to get educated. It’s rooted into the culture that education is so important, so we now have 30,000 skills out there today, up from 10,000 when we launched Alexa, and many of those are education-based skills, and the demand for those is very high. During Diwali, we launched our first phone with Alexa integrated on it with Xiaomi. It’s off to a great start and sold out in a minute or something. That’s another example of something we did India first.

Smartphones sales are still growing, but the Alexa devices, at $50, are still out of reach. Is smartphone a tactic that will play out more?
I would point out that during the holiday season (in India), the cost of Echo was $30-$35. But, already, because we have an implementation that allows third parties to build, or use Alexa as an end point in the cloud, we’re seeing companies do that. Motorola already had a pair of headphones at $10-$15, so we have devices at much lower price points. I do think from the sales performance that we just saw and the quick adoption that we’re seeing with Alexa, (that) we’re seeing the sub-$50 is garnering a lot of demand in India.

Do you see more subscription-based services on Alexa?
Music is the quintessential case for subscription. Here (in India), you do have very large ad supported products as well, but it’s hard to not see the rise of adoption of subscription based music. That’s been a big winner. In other parts of the world, audio-books that are subscription based have also become a big business. We’ve started building out the ability to build subscription based services, so skill providers can use that as a model.