Why Amazon and Google May Lose Their Primacy in a Smart Speaker Market Boom
And why 2019 will be a springboard for those who count on AI
With scores of companies thrilled to cash in on the hype around AI some statistics may be puzzling — technology became so popular that 40% of self-proclaimed AI startups are not even using AI, they only luring their investors. The technology is very promising indeed, but the truth is never that simple. Well, this brief article is here to reflect the real state of affairs at the global market of smart speakers and assistants.
Spoiler: ignoring AI-powered services and devices may still be a high-risk strategy for your business
Inspiring stats
2018 has shown that smart speaker market is the most rapidly growing sector of consumer electronics ever — for it has outpaced and almost doubled the smartphones market penetration. Last year smart speaker shipments reached 78 million units worldwide — and that’s 125% more than last year. This makes smart speaker a device with the highest year-to-year increase and its total offtake can be estimated as 120 million devices. Since smart speakers are invading non-English speaking countries and major brands open their platforms for third-party developers it becomes clear that 2019 is the best time to make artificial intelligence work for you.
Becoming an integral part of everyday life, AI motivates our buying decisions, assists children’s education and gets through business. Large companies compete for leadership in the global market while developing digital assistants that are able to speak to people and interpret their intentions. These smart assistants control smart speakers and they may be built into any other device, let alone smartphones.
You may not only turn your favorite track or fire on the radio simply using your voice (come on, this is sooo 2017) — today smart assistants will gently wake you up in the morning, get you an Uber ride, order food and Amazon goods delivery. They can educate and entertain through interactive games and fun.
But although assistants can do a lot of stuff today, they’re just at the beginning yet. Major brands open their ecosystems and set up challenges for third-party developers to create more skills, and this strategy is quite smart, because providing competitive incitements for developers to build skills should increase the number of high-quality options for consumers. And while these companies hope those efforts will induce smart speakers’ adoption and use, third-party developers and their skills establish a new emerging market which, in turn, work on assistants’ improvement.
These joint efforts of business and developers will teach smart assistant a lot more: soon they would be able to book hotels and flights, make a reservation in a restaurant and even get you through a new language course. And when routine tasking wouldn’t require a human participation or a mobile app, when we will be solving our everyday problems through the voice only — then we would be able to claim that new conversational interfaces have come into common use firmly.
The state of AI today
Rapid advancement of technology is caused by a common human dream of an almighty Artificial Intelligence, heavy private sector investments and increasing government spending on AI-based technologies. From year to year smart speakers are improving in speech recognition accuracy and localization process of NLU (Natural Language Understanding). On top of that, thanks to evolving machine learning, smart speakers reduce the accent gap: now they won’t be misled by strong dialects or a nonnative speakers.
Plus, smart speakers’ complexity and build cost are declining, B2C increasingly integrates chatbots and digital assistants into their services to give personalized offer and improve customer experience. Among the other aspects that facilitate the rapid spread of a voice-assistants are: entertaining and educating skills outburst, growing accessibility and, of course, virality effect. Conversational AI empowers companies to use chatbots, applications and assistants to boost sales, increase operational efficiencies and cut the labour time. Whatever you’re willing to find — conversational AI interfaces are here to help with everything.
With increased investment in AI technologies and large numbers of vendors scope of application expands:
AI has gone beyond the hype to something that delivers real results for business today.
There is a greater potential of AI and those who do not capitalize on the growth of technology today may lose out in the nearest future.
If the overall momentum will be maintained, conversational AI world market size will grow up to $15,7 billion by 2024. Companies will be impelled to implement AI-based technologies across the business and use it to bring themselves up to speed with their competitors.
Food for thought
There’s already a huge gap between the AI leaders and those who lagged behind. For sure the conversational AI market is just in the process of building and the smart speakers’ sector is still unsaturated, but trend analysis enables us to say that in 2023 some company would sell a 1 billionth AI device. But can we be sure that this selling would be made by one of today’s giants? Can we say with confidence that Amazon who sold 24 million devices last year or Google, who made it to 23.3 million, would stay at the forefront of technological innovation? Will that be another American big brand?
In comparison with the rapid development of AI-based technologies in the North America European market looks pretty empty. This is due to the fact that speech recognition and chatbot technologies still struggle to gain traction in European countries, due to the huge variety of accents and languages. Smart speaker doesn’t make any sense without skills, services and a useful content. Then this content should be applied to the purposes of business; it should be in place and high in demand. Localization and translation of those products to new markets and languages is quite a challenging task. Again, it takes time.
China’s device manufacturers playing a hardball — with a rapid sales growth from 1 to 20 million devices in just one year we still have to admit that it’s a drop in the bucket for a giantlike Chinese market and its 1.4 billion population. At the bright side it took 3.5 years for Amazon and Google to cover 23% of USA population, so China may pick up the pace and get the ball rolling: fierce competition between local companies and a breakneck reduction of component prices will have its effect. That means, over 3 years China could probably account for more than 300 million of smart speakers.
But who do their best for further expanding of their presence in the global edge AI software market now?
Although Amazon vigorously staffs linguists of all European languages and Google developers are tweaking their Assistant in support of local content and services in a fast-track manner, we got to admit that the process of fulfilling smart assistants with the necessary ‘local’ skills is far from over. Indeed striking that Google started to bring up its Assistant long after Apple introduced Siri, but it made a breakthrough just over the past two years. Google even settled an epic marketing campaign at CES in Las Vegas this year. So, you know, it’s all ahead of them.
Apple was a pioneer in this field — App Store packed with 500 apps was presented in summer of 2008. In 2017 that figure had risen impressively to more than 2 million apps, but Apple have never brought an ecosystem for Siri skills developers. When in 2017 Apple HomePad was launched it was obvious that corporation is struggling to keep pace with Amazon and Google, not least because of the slow functionality development — yes, owing to the lack of Siri skills ecosystem. But there’s a reason to believe that this is just about to change since Apple has bought an American voice startup Pullstring this February.
Samsung is trying to shinny up too. In 2016 company have bought startup Viv (this team used to work on Siri), and a year later announced voice assistant Bixby on smartphones. Pretty soon it was clear that Samsung has skills and content issues, plus, Bixby struggled to pick up languages. Being aware that the company is falling behind, Samsung speeded up Bixby’s localization and started persevering staff recruitment.
Moreover, in August of 2018 company announced their smart Samsung Galaxy Home Speaker. Smart device didn’t hit the market yet, but it’s obvious that Galaxy Home Speaker is a company’s number 1 priority. When it comes to a unique selling proposition Samsung claims that this is “the only AI speaker that intuitively moves a wave of sound directly toward you when you ask it to. So no matter where you are in the room, you’ll find yourself immersed in sound”. Well, it’s something to wait for. Although the company didn’t share a specific release date, Samsung co-CEO DJ Koh hinted that smart speaker will go on sale sometime by April. And who knows, maybe the whole market situation will change fundamentally.
Huawei is the largest corporation that ranks №2 in smartphone sales volume and they may be actively working on developing a smart speaker too. In 2018 company announced Huawei AI Speaker with its own smart assistant Xiaoyi targeting the Chinese market. And although Huawei still hasn’t introduced a multilingual assistant it’s most probably that users might be seeing it soon for, to give one example, the development center Huawei in Russia also started recruitment of staff.
Xiaomi corporation is the world’s fourth-biggest smartphone manufacturer and they still have no smart assistant, but they do work closely on developing and adopting conversational AI. With the goal of positioning as an Internet company, Xiaomi is planning to invest over $1.5 billion on artificial intelligence and smart devices over the next five years. Besides, Xiaomi enters the TV market and to differ advantageously from Samsung and other competitors company builds a virtual assistant and a microphone array into TV set, and these boxes already have a very positive feedback: more than 77K favorable reports. Then the news about TCL Group investment broke — this cooperation will clearly strengthen Xiaomi’s capacity in the field of home appliances. And before long, IDC India released a report on smart home market showing that in the third quarter of 2018, Xiaomi TV has got ahead of Samsung to become India’s largest smart TV brand.
It’s difficult to accurately predict when Xiaomi smart assistants will be entering the world market and when there will be other languages, but they are probably going to start with English and Russian since India and Russia are among the company’s most important outlets.
As can be seen from the above almost all the major companies and electronics manufacturers have indicated their ambitious intentions at the smart speakers market. And yet they have enough time to fill free MEA, APAC and Latin America markets.
Besides, many other technically driven countries like beforementioned China, Russia and, in some measure, South Korea and Japan, nurture their local ecosystem — they have their own Internet systems, cutting-edge technologies and high-tech companies that serve the needs of a domestic market but can also be compared by technological capabilities to Google or Facebook. And their approach is far from always imitating a Western experience, which enables them to create efficient insights that can be applicable to the whole industry sector.
There’s no telling what is about to happen at the smart speaker market over the next while. There are multiple different scenarios and no one knows which business idea will blow the market next or what trend would clearly define a future development of the AI.
But there is one newish trend that worth drawing your attention — smart displays. This is a relatively fresh smart speaker market segment. These devices combine microphone array, proper acoustics, high quality display and a smart assistant that understands natural language. There are already a lot of them available right now and these all do for different use-cases.
It is indicative that this segment grows at a super-fast pace: Amazon Echo Show — 1st generation broke into a market in June of 2017, Google presented their first smart displays just a while ago — in May of 2018. Anyway, over the 2018 average smart display sales estimated 8.2% of total smart speaker sales and by the end of the year Google’s market share has grown up to 25%. Fourth quarter of 2018 has shown exciting opportunities for a Chinese market too: according to Canalys estimates out of 2,5 million smart speakers shipped in China, 42% came with displays — and it’s like 1 million devices out of 2,5 million smart speakers.
AI is now, it is the present
And in the foreseeable future we’ll be surrounded with millions of AI-powered devices that will become an essential access channel to services and goods. Smart speaker is a fast-paced market but it’s not divided yet and severe competition within it is underway — major brands and consumer electronics manufacturers still got time to rival for the thin markets of Europe, Southeast Asia and Latin America.
Market is rapidly evolving, most functional and advanced devices (like smart displays) are spinning up so it’s hard to foresee which challenger would involve in this field next (and it’s not necessarily going to be another big brand name). Competition will shift from devices to assistants and will be building around their characteristics and content. Growing smart assistant capabilities should be the top priority for those striving to get on top of voice-based services.
Market’s hasty growth, competition on content and developer ecosystems — all this opens great opportunities and large possibilities for business, manufacturers and engineers. Those who focus their attention on this field today have the power to create innovative products and new customer values tomorrow. Those will grow faster and would make some real money.
