Will Google have the last laugh over Amazon in the home device war?
Last June 19, Google launched its Google Home product family in Spain, which includes its voice assistant, its mini version and Google Wifi, a system of signal repeater routers that acts as an intelligent mesh network. I don’t normally comment on product launches in local markets, but this is interesting in relation to an increasingly fundamental variable in technology and innovation: time-to-market, in other words, how long its takes to get an idea from the drawing board to the shops.
For technology companies, the major domestic time-to-market battleground is the United States, but which paradoxically are slow in other, often larger markets. The time that elapses between US and international launches seems to get longer and longer, effectively turning the rest of us into second-class consumers, worthy only of the attention although in many cases of undoubted quantitative importance, receive very little attention, relegated to the judgment of sales teams and their managers, whose approach and vision is generally more tactical than strategic.
All of which may be why Amazon, a home assistant pioneer, lost its early dominance in many markets to Google, a competitor best avoided. Smart speakers are now the fastest growing category in the consumer technology segment, with annual 210% growth and some nine million units sold in the first quarter of 2018. What’s more, as Canalys points out, for the first time since the creation of this market, Google is selling more units than Amazon: 3.2 million Google Homes compared to 2.5 million Amazon Echoes. A strategy designed by a Google that was determined to lead a market it sees as the new search bar — with complex and dangerous implications, since it only provides just one result instead of a list of ten links — and that has managed to stage a comeback to take the lead in the US market, as well as in many others, where it is fast catching up.
Just how significant is Google’s performance? In the first quarter of 2017, Amazon dominated sales of new devices, with a share of 80%; a year later, Google has 32% compared to Amazon’s 28%. Amazon’s year-on-year growth of home assistants is steady at 8%, compared to Google’s 483%. We need to take into account that Google is a relatively new entrant to an already mature market: the Amazon Echo was launched November 2014, two years before the Google Home, and the former still has a 43.6% share of the global market, compared to Google’s 26.5%. But despite a major overhaul of the product and the introduction of many new models, it cannot counter Google’s big push in a category that is still enjoying a good launch in China (1.8 million devices compared to 4.1 million in the United States), with devices manufactured there that will eventually reach international markets.
Amazon Echo is currently only available in the United States, the United Kingdom, Germany and India, while countries like Spain are still enduring an endless period of testing and finalizing language device settings. Thanks to the development of Google Assistant for smartphone around the world, Google can adapt to local markets faster and is already present, in addition to the United States, Canada and Australia, in Germany, India, France, Italy, Japan, and now Spain. In terms of machine learning, Google is doing what it said it would: win markets because its products learn faster than those of its competitors.
In many ways, Amazon has had to take on the onerous task of convincing the public of the benefits of home assistants: it has had to deal with all the initial problems of people’s misgivings toward having a device with nine microphones in their living room listening out for the magic word that activates it, as well as negative media coverage such as the US police demanding recordings to be used as evidence in a murder investigation, or when a recording of a private conversation was inadvertently sent to a third party… while Google has waited and then turned up to market with a similar product that is basically an adaptation of what it has been testing on Android smartphones.
All in all, an interesting case study of how to use time-to-market strategically in new categories of innovative products and consumer electronics that could end up being more important than some pundits think. And as so often happens in life, who laughs last, laughs longer.