Smart speaker sales set to race past 50 million in 2018

Smart speaker sales set to race past 50 million in 2018

Smart speaker sales set to race past 50 million in 2018
Google Home (Credit: Google)

As the smart speaker market matures, Amazon and Google will face more competition and homegrown players will seek to ignite demand in China. 

“Alexa, tell me how many smart speakers there are in the world?”

By the end of this year, the answer to that question will be around 56.3 million, if recent predictions from research firm Canalys come good. By way of contrast, that’s up from an estimated 33 million sold in 2017.

Analysts at the company expect Amazon and Google to continue to lead the market, with their Echo and Home devices respectively. The two are fierce rivals in this market, which has meant that consumers have benefited from ruthless price-cutting. At the same time, smart speakers are quickly gaining in popularity as smart home ‘hubs’, providing a voice interface by which occupants can control lighting, heating and entertainment.

But Amazon and Google will likely face increased competition in 2018, says Canalys, as new vendors enter the race. These include Apple, which announced its HomePod speaker in mid-2017, before later admitting that the device wouldn’t ship until early this year, because it needed more work to make it ready-for-market.

Smart speaker sales set to race past 50 million in 2018, Canalys

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2018: A defining year

All this means that 2018 is set to be “the defining year” for smart speaker adoption, according to Canalys research analyst Lucio Chen. “Smart speaker uptake has grown faster than any other consumer technology we’ve recently encountered, such as AR [augmented reality], VR [virtual reality] or even wearables.”

While 2017 may have been a banner year for smart speakers in terms of hardware sales, he adds, vendors will this year be looking to monetize the installed base in the US and beyond, with speaker-based services for which they can charge a fee. “The possibilities to do this are endless, be it discreet advertising, content subscription bundles, premium services or enterprise solutions,” says Chen.

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A question of ‘stickiness’

In terms of geography, the US is the largest market for smart speakers and looks set to stay that way into 2020. That’s down to high broadband penetration, low prices and “a keen proclivity” to adopt new technologies.

And once adopted, smart speakers demonstrate what some market watchers call ‘strong attachment rates’; in other words, this technology doesn’t wind up in the back of a cupboard or abandoned in a drawer after the honeymoon period. Smart speakers have a ‘stickiness’ that mean that users keep using – and fresh tie-ups with smart home tech are likely to strengthen attachment rates.

“Alexa’s multiple smart home integrations, Google’s partnership with Nest and Apple’s HomeKit initiatives will continue to excite consumers of the smart speaker and fuel sales in 2018,” says Canalys analyst Vincent Thielke.

In China, however, success could elude Amazon and Google. Instead, local vendors seem likely to prevail, with Alibaba, JD.com and Xiaomi all having launched their own versions to test the waters.

“Market dynamics in China can change very quickly,” says Lucio Chen. “Traditional hardware vendors have been cautious at the beginning, but with deep-pocketed Alibaba ramping up investment in the category, and Xiaomi launching lower-priced skews of its XiaoAI smart speaker, the market will be ignited in no time.”

Read more: Apple joins race for smart home supremacy with HomePod


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