Smart Speaker Market Overview
With the holiday season around the corner, it’s expected that smart speakers will be another hot ticket item on people’s wish lists.
In this, our first article in a series looking at key themes from Voice Summit 2018, we will explore consumer adoption of smart speakers and which companies are leading the market. While voice technology is not hardware specific, most of the industry currently tends to focus on those devices as they are becoming increasingly popular in households. And holiday sales will continue to be a measure of success.
User behaviour
In one of the first talks at Voice Summit, Brett Kinsella of VoiceBot.ai, a one-stop shop for “important news, commentary, research and analysis of voice technology,” shared a number of interesting industry insights.
Smart speakers adoption is growing at a quicker pace than previous technologies. Kinsella’s Voicebot report indicated that, by March 2018, approximately 19% of U.S. adults owned a smart speaker. By comparison, it took 13 years for television to match that same penetration in the U.S. The growth is closer to how the social networks are expanding.
Smart speakers are not idle in the household. An interesting data point from their November report is that smart speakers owners are interacting regularly with their device: 45 per cent daily and 79 per cent monthly. You can check out more smart speaker data in their 2018 “Adoption Report.”
What might explain the popularity of these devices?
Well, onboarding for voice-enabled devices appears to be much easier compared to other mediums like a computer or smartphone. Despite amazing efforts from UX, UI and graphic designers, sometimes it is not the easiest task to onboard a user to a new application on platforms such as a screen with a remote, a smartphone or a tablet. On the other hand, voice appears to be much more natural. People have been doing it for tens (possibly hundreds) of thousands of years all over the world. This differs from understanding a touchscreen or using a mouse, which could be a barrier preventing some users from embracing the technology.
Another aspect to look at when analyzing the success of smart speakers is how its owners quickly become promoters. Kinsella illustrated this point by asking the audience: how many people have used a smart speaker with another person in the room? Watching someone interact with the technology is more powerful even than word of mouth when it comes to convincing someone to pick up a new technology.
Considering its adoption rate, we seem to have moved past the question of “Is voice a thing?” into the domain of “Where do I get started?” Businesses and product builders should not wonder whether or not to play in the voice space but focus, rather, on how to add it in their value proposition.
Who is leading the voice assistant war?
Amazon, the pioneer of smart speakers which are built on solid AWS infrastructure, is ahead of the pack at 31.9% of global smart speaker sales. Their dominance is mainly due to the ability to ride each wave of new internet trends. They were early to set the standard in e-commerce transactions and early to design search in the product catalog or recommendation. These trends, coupled with a large customer base on their two-click two-day marketplace, supports their top rank.
At 29.8%, Google is second but catching up to Amazon, positioning themselves to be able to leverage the vast user base for their many existing products including Search, G Suite and Android.
Apple is a distant third with Siri. While it offered the first voice assistant to the market through iPhones, its capabilities underwhelmed many users. Their HomePod has failed to grab many of the Apple faithful. But a leap in Siri’s technology could turn the market upside down. We’d consider it a sleeper brand in this industry.
Finally, Microsoft has been sharpening its voice assistant technology, dubbed Cortana, but has not made a strong push yet. The opportunity remains considerable given their strong presence in the enterprise market to leverage voice to help power successful services such as Microsoft Office.
Other potential contenders include Samsung. Although not an active player, it is one of the leaders in hardware and with a sizeable ownership of the mobile market, its virtual assistant, Bixby, could become a rival. There is also IBM. Although the strategy with Watson is not clear yet, its enterprise business could be a launch pad into the voice market. Finally we have Facebook who has been leading the charge with chatbot technology and its assistant M. Despite enabling their Portal suite of video chat devices with Alexa, their two billion global user base make them a threat to any leader in the voice space.
The state of the global market is also split along the Easter and Western hemispheres. Aside from the key North American players we’ve looked at, a lucrative market like China, for instance, is dominated by home-grown companies including Xiaomi with Xiao Ai, Baidu Dueros and Alibaba (recently praised for a stunning demo of its own Duplex).
Despite the current leaderboard ranking, the race is far from over.
Users are not yet locked to a specific platform. However, Alexa and Google Assistant have the greatest awareness among consumers.
Virtual assistants need to become very performant. Amazon and Google are at an advantage here as their assistants have been trained over the past few years with extensive polishing of Natural Language Processing and Natural Language Understanding.
Despite growing consumer adoption, a few more hurdles need to be cleared. For instance, there are still untapped non-English markets around the world, but internationalizing the technology is a bit more challenging than simply translation as cultural context — the nuances and specificities in language and conversation — is an important aspect to voice. Security and privacy are also of concerns to consumers to a greater or lesser degree depending on the market.
If you were at the summit, let us know what we may have missed in terms of introducing smart speakers and the status quo of Voice technology.
p.s. A special shout out to Jess for taking the time to edit this article.
