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Will Amazon Let Developers Monetize the Echo?

March 28, 2016, 2:31 PM UTC
S. Higginbotham for Fortune.

Big Ass Fans, the maker of a premium home ceiling fan, has a new way for users to control their connected fans. Just ask Alexa.

Last week, the Kentucky company said it has built an integration with the Amazon Echo, allowing owners of the $180 voice-activated-speaker control their ceiling fans. The integration is part of the Echo’s connected home efforts, which means that these users can directly ask Alexa to turn on the fans.

It also means other connected fans can use the same language. Amazon has these deeper integrations for lights, thermostats, and now fans.

But those deeper integrations are only open to a few. For everyone else, there are Skills.

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Amazon currently has more than 300 listed Skills ranging from ordering pizza to 7-minute workouts. FitBit, Domino’s, Uber, and Capital One are just a few companies that have created Skills. Leor Grebler, the CEO of Unified Computer Intelligence Corporation, a company that created a predecessor to the Echo in the Ubi back in 2012, looks at Skills and sees the future.

“I think it’s going to be like the next App Store,” says Grebler. The App Store, launched by Apple in 2008, set off a land rush for developers who built programs that would run on the iPhone. A subset of developers made millions, and consumers flocked to the iPhone as a source of the latest cool apps. The model has been copied by mobile phone companies, cloud platforms, and yes, companies trying to invade the smart home.

But with the Echo, Amazon has created a platform that developers think may be worthy of becoming the next big app store. This is good for Amazon because the competition is coming. At CES in January, I saw several reference designs for Echo-like products. LG has launched one already, Sony showed off a prototype at Mobile World Congress last month, and apparently Google is even building one.

But in the case of building an ecosystem, Amazon is out ahead. It has a robust audience and the subsequent favor of developers rushing to put their services on its platform.

The big question is what Amazon will do next. Grebler, whose company has built a Skill that lets developers test their Amazon voice interfaces, has made his bet. He’s trying to build some useful infrastructure the serves the burgeoning platform and its developers.

However, it’s still unclear how the Echo will serve Amazon from a revenue standpoint. Is it a hardware play? Will Amazon make money on Skills? It’s also unclear how Skills or deeper integrations will serve the developers’ needs outside of marketing and offering an additional product experience.

Today, Amazon doesn’t offer developers a way to charge for Skills or integrations on the Echo. That may change. I asked Brittany Taylor, an Amazon spokeswoman, if the tech giant plans to let developers charge for skills or build freemium models. Her response didn’t rule it out:

To answer your question, not today. Right now we’re working to make Skills more discoverable for customers—for example we recently launched ratings and reviews so customers can discover highly rated skills. We’re also talking to developers about what they’d like to see.

So far, developers are hoping for better presentation and search so that Echo users can find their Skills. Eventually, others might want custom voice branding.

It’s clear Amazon is listening to its developers. Those working with Amazon say the process has improved tremendously. In the Echo’s early days, the platform didn’t even tell developers if a user’s attempt to access the developer’s service was successful. Amazon employees also weren’t as responsive to developer questions. Those things have changed.

Joss Scholten, chief technology officer and co-founder of smart home software provider Yonomi said that three to four months ago when he was contemplating writing a Skill or a deeper integration with the Echo, he chose to do a deeper integration because writing a Skill would bury the Yonomi Skill “at the bottom of 10 pages.” Additionally, when he tried to get to that section, it took him 15 minutes because the design was so frustrating.

But as that improves, he’s considering what Skills to bring to the Echo, because it’s more flexible than building the deep integration. First, the deep integrations are only for smart home companies. Second, they will open up a new vocabulary to let consumers do more with Yonomi.

As for why a company might work with Amazon, Landon Borders, a product development manager with Big Ass Fans, says the Echo is “wildly popular,” so it made sense to work with Amazon. Starting this year, all Big Ass Fans will be Wi-Fi enabled, which means they can connect to other systems. So far, the company has a Nest integration and has put in the hardware so its fans can work with Apple’s HomeKit efforts. However, Borders says it isn’t certain if HomeKit will be compatible.

For more about Amazon Alexa and Apple’s HomeKit, watch:

Three platforms may not seem like a lot, as companies found in the mobile phone era, supporting an app or integration across multiple platforms takes time and money. Few companies can support the hundreds of connected home devices out there. Amazon’s Echo is both popular as a smart home hub but also as a way to add voice interactions. When it comes to the smart home, voice is emerging as a hot user interface.

Almost three out of four (73%) smart home owners use voice commands, with 61 percent of those consumers expressing an interest in wanting to use voice to control more products in their homes, according to The NPD Group Connected Intelligence Connected Home Automation Report. Only 10% of U.S. homes with Internet service have a smart home automation device installed.

So the market for the connected home integrations are still small. Nevertheless, Amazon is winning with its deep, smart home integrations such as what it offered Big Ass Fans. Plus, if Amazon can continue to improve its Skills program, developers of all kinds are eager to use that to add voice in the home.

Then the real question becomes if companies will use the Echo as a marketing channel or if it can grow into a platform that offers a way to make real dollars.