Analyst firm Canalys expects the smart speaker market to approach an installed base of 100 million devices by the end of this year, making it almost 2.5 times bigger than at the end of 2017.
Amazon Echo devices will account for over 50 percent of the installed base in 2018, while Google’s Home series will account for 30 percent. At present, Apple’s HomePods – late entrants to the market – are trailing, and will account for a meagre four percent of the 2018 base, according to Canalys.
However, the report appears to contradict an earlier Canalys survey in May, which found that sales of Google Home and Home Mini devices had overtaken Amazon’s Alexa-powered range for the first time in Q1 2018. That report contradicted other surveys at the time, which found that Amazon retained the lead.
Whichever outlook was correct, the overall installed base will keep growing, more than doubling in size to reach 225 million units by 2020, said Canalys.
“The US is the world leader in smart speaker adoption,” said research analyst Vincent Thielke. “Amazon and Google know the power of an ecosystem lock-in and have been engaged in a fierce price war to try and build the largest installed base.
“As Amazon’s Prime Day looms, customers expect discounts, and the company is set for a rush of shipments.”
Amazon and Google will take their devices beyond the smart home and deploy them in a range of new scenarios, he added. “Their business development teams are targeting commercial opportunities, such as hotels, offices, gyms, and airports, with initiatives such as Amazon’s Alexa for Business and Alexa for Hospitality.
“These deployments are a major opportunity for the IT channel to develop solutions and provide technical skills and services that customers may lack.”
But America is far from the only market for the devices, said Canalys. “China is still a nascent market for smart speakers, but it is a sleeping giant,” explained analyst Hattie He. “Local players, such as Alibaba and Xiaomi, are investing heavily.
“In the second half of 2018, sales promotions will be an important driver, as vendors anticipate a surge of shipments during the 6.18 Shopping Festival and Singles Day in November.
“As competition intensifies, Chinese vendors will expand their product portfolios to hit more price points and offer a greater range of capabilities.
“But for long-term growth in China, a more complete voice service and better user engagement are just as important. China has massive potential, with more than 450 million households – over three times the number in the US.”
Growth creates growth
“The rapid growth of the smart speaker installed base is itself a growth driver,” added Canalys analyst Ben Stanton. “Amazon and Google are desperate to prove the scale and reach of their platforms to developers.
“As the Amazon Alexa and Google Assistant speaker installed bases grow, the companies can make a more compelling case. And as developers invest in voice and try to cash in on the creation of new experiences, smart speaker adoption will grow.
“The battle for developers’ attention is vital for Google and Amazon. It will determine the speed at which they can appeal to new demographics, move into new industry verticals, and gain traction in new countries.”
Plus: Sonos files for IPO
In related news, smart speaker specialist Sonos filed for IPO this week, with the aim of raising up to $100 million. The company partners with Apple Music, Pandora, Spotify, and TuneIn, and has integrated Amazon’s Alexa into its Sonos One product. Sonos is adding support for Apple’s Siri and the Google Home range later this year.
Sonos CEO Patrick Spence said, “Our system is not – and never will be – an entry gate into a walled garden. We’re deeply committed to keeping Sonos open to every voice assistant, streaming service, and company that wants to build on our platform.”
Internet of Business says
The shift of smart speakers into offices has become increasingly visible in 2018, with Amazon in particular focusing its Alexa-powered devices on business applications, particularly for local environmental controls and meeting-management services.
Meanwhile, IBM is focusing its Watson Assistant technology on being a portable assistant that can link executives with their cars, travel, hotels, and other services, with the aim of creating seamless, personalised applications across a range of devices and scenarios.