Dive Brief:

• Amazon reportedly is working on its next-generation Echo smart speaker with changes expected in the exterior design of the unit, as well as its overall technical performance, according to Engadget. The result will be a higher quality audio device, placating some critics of the original Echo design. 

• The report suggests that the new Echo device will have a smaller physical profile than the existing flagship Echo with both shorter and slimmer than the original, as described by Engadget. It also reportedly will have a softer exterior surface and more rounded edges, rather than the hard plastic casing of the original device.

• In addition, reported planned audio upgrades include a move from one large tweeter and one woofer to several tweeters for a more refined sound. Amazon also is said to be upgrading the Echo’s microphone technology in some way.

Dive Insight:

Amazon hasn't said anything about this upgrade, and its fairly constant flow of new devices in the Echo family may have made some believe an upgrade of the original wasn't coming anytime soon. However, we should have known Amazon's competitive spirit is too restless for the company to rest on its Echo laurels. In this case, the impending arrival of the Apple HomePod may be providing all the inspiration Amazon requires to upgrade the Echo.

Make no mistake, the reported physical changes to the Echo would make it look a little more like the HomePod, although hopefully less like the roll of toilet paper the HomePod resembles. Any sort of microphone upgrade would help and older product compete with a newer one. The Echo already has the HomePod beat on price — roughly $179 vs. the reported initial price of $349 for Apple HomePod.

Aside from the need to put its best device forward to compete with a new one from Apple, Amazon has plenty of reason to upgrade the Echo. For starters, the Echo has been a massive sales hit, so keep those happy customers coming back for an even better device.

Also, following a recent Prime Day during which Amazon yet again heavily promoted this already hot-selling device, NPD Group Checkout Tracking came up with some data illustrating the Echo's wide-ranging effect. For example, purchases from Amazon Prime Now, the one-hour delivery service focused on food and household essentials, soar nearly 140% after an Echo arrives in a home. Half of all Echo owners’ online dollars are spent at Amazon, NPD Group said.

Beyond Amazon, the Echo is generating revenue for other companies, too. Domino’s Pizza, for example, which has a partnership with Amazon, saw dollar purchases rise more than 4% among Echo owners. Nespresso, which markets a smart coffee machine that interacts with Echo, saw dollar purchases rise 7% and the NPD Group said overall online spending by consumers rose after the purchase of an Echo in every major market category except for travel.

So bring on the Echo 2.0 (although that's not what Amazon is calling the next-gen device, as for as we know.) A sleeker, shorter, better-sounding version of a device that already has been a game-changer seems like a no-brainer.