Despite having arguably created the smart speaker category with the Echo device -- and having experienced success with the Echo and attached Alexa virtual assistant platform -- Amazon will see its first-mover advantage in this sector evaporate within a few years, according to a new report from IHS Markit.
In its report, entitled “Smart Speakers – From Audio to the Smart Home,” IHS Markit predicts Google Assistant will surpass Amazon’s Alexa in smart speaker shipments by the end of 2019. By 2020, more than twice as many speakers equipped with Google Assistant will ship as those with Alexa, at 5.4 million to 2.4 million units respectively.
Amazon revolutionized the smart speaker category in late 2014 with the Echo, a microphone-equipped, Wi-Fi-connected speaker that can tap into cloud-based virtual assistance, all driven by the user’s voice.
“Amazon faces an uphill battle, one that favors competitors with larger, broader ecosystems behind them,” said Paul Erickson, senior analyst for IHS Markit. “Also, in the virtual assistant arena, Amazon is aggressively playing catch-up with Apple and especially with Google in AI and machine learning. Google has particular advantages in this arena given the rich trove of data across their services that can be used to drive deeper personalization in virtual assistance.”
Seemingly understanding Google’s edge in these areas, Amazon has aggressively ramped up its marketing and PR velocity for Echo and Alexa as of late - to carve out and cement as much of a space as possible in the smart speaker – and attached virtual assistant -- market, the IHS Markit report says.
The recent releases of a lower-priced Echo Dot and discounted multi-pack Dot bundle pricing, show a willingness to quickly drive as much market penetration as possible with a low-priced option -- despite the potential cannibalization of the higher-revenue-generating Tap and Echo models. This, IHS Markit says, only underscores Amazon’s apparent sense of urgency.
The Smart Speaker market remains relatively new, with the majority of sales thus far skewing towards early adopters, technophiles and Amazon Prime members. Mainstream consumers will gradually become aware and adoptive over time, particularly as prices drop, but are most likely to favor products with virtual assistants they already know and use – such as Google Now / Assistant and Apple’s Siri. With control of the smart home at stake, Apple is also expected to enter the smart speaker market in the near future.
“With the Alexa-equipped Echo, Amazon has been the first-mover and leader, albeit in a market which up until recently had no competition,” Erickson said. “The next few years will be telling for Amazon in terms of seeing how much further oxygen will be left for Alexa in the smart speaker market once Google and others join the fray.”
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