The smart speaker market is about to get very crowded fast. Which is interesting, since it is unclear how big of a market this category is yet. Amazon and Google are already making their plays. Apple is about the enter the market this holiday with HomePod. Microsoft and Harmon Kardon have announced a product to launch this fall, rumor has it Samsung is looking to launch their smart speaker as well, and plans have uncovered Facebook’s hardware division has plans for a smart speaker as well.
An interesting first observation here is how every one of the companies I just mentioned are the 800-pound gorillas in tech. Facebook, Apple, Google, Microsoft, and Amazon (FAGMA as we are calling it), are the dominant players in tech, each has a particular lock on a set of customers, and each seems to get stronger by the quarter. When you look at the market strategies of each of these players you see quite a bit of overlap in many areas. And what is interesting of late is that each of them seems to be eyeing more and more of each other’s markets.
If we understand each of them to appear to be spreading their fingers into each other’s markets in some way, then it makes sense that they will each want to attack specific new markets/categories as well when there is a strategy or business alignment. It seems this is the case with smart speakers. What is intriguing to me if all these companies do offer speakers is to observe how it plays out when all the 800-pound gorillas in tech take on the same market at the same time relatively early in a markets creation.
Depending on which of the bean counting firms you believe, sales of smart speakers to date range between 10-20 million. This market is a little tricky to forecast at this particular moment in time because I’d like to see how sticky it is overall. There is a worthy debate to how much these devices can displace things like smartphones, and even smart watches, with specific use cases. Most of you know our firm has been doing continual research on this space so I’d like to share this chart comparing the most common things Echo owners do, and Google Home owners do with their smart speaker.
As you examine this chart, it is easy to see overlap on things you do with your smartphone or PC/Tablet, but think about what device may be best positioned in general for certain tasks over others. For example, I’m convinced a device like a smart speaker and a smart watch is best positioned for smart home management, tasks, control of smart devices, etc. It is also important to know these devices are most commonly found in the living room and kitchen. Our year over year study on smart speakers indicated the kitchen was quickly becoming the dominant location. The location will depend on how the owners decide they best want to use the device but Amazon is onto something with a suite of Echo products which you can argue are being designed with specific rooms of the house in mind.
While I expect, the later entrants to the smart speaker market will hope to create new use cases, the reality is if this is how consumers are working out how best to use these products, then not every company hoping to enter the market has what it takes to succeed. Microsoft with Cortana, or Samsung with Bixby, and Facebook with whatever their assistant will be, need to find a unique angle if they want to squeeze into this market. And honestly, a smart speaker as a form factor may not be their ideal strategy either.
Apple’s approach is interesting but also has some big challenges. Music is no doubt the hero features of the HomePod but it all honestly Siri needs to be the hero feature if not right away then at least soon after. Let’s hope Apple HomePod owners buy it for the music and increase their usage of it thanks to Siri. I’ll write something specific on this subject but just to tease it out, I’ve automated rooms in my house with both Alexa as a control point and Siri as a control point. It is very interesting to compare and contrast using each for smart home control in their current versions today.
I’m not making a big bold prediction, but if I had to offer a guess today on who wins the smart speaker space, my gut is Amazon and Apple out of all the names I mentioned above making a smart speaker. Obviously, this is somewhat market dependent since Amazon is not in every market. So you can argue Facebook and Google may have a better play in markets like India, SE Asia, and other areas where they are even more dominant than they are in the west. China will have their own players as well so “winning” is certainly a relative market term.
My favorite thing about studying new markets is all the new learning and new consumer behavior we get to study and think through. Smart speakers are undoubtedly the hot trend and one that went mainstream faster than many realized. I expect them to be very popular this holiday season but the key observations to be made is how consumer behavior with the changes after six months or longer of usage. That is the big thing we are keeping our eye on.
