New findings from research firm Canalys estimate the global smart speaker market will increase to 56.3 million shipments in 2018, but the elusive Chinese market still ducks and dives.

Jamie Davies

January 5, 2018

3 Min Read
2018 to be breakthrough year for smart speakers, but China evades the grasp

New findings from research firm Canalys estimate the global smart speaker market will increase to 56.3 million shipments in 2018, but the elusive Chinese market still ducks and dives.

2017 has been a good year for smart speakers, with the concept gaining general acceptance in the mass market. This is down to several factors, and lessons learned from previous tech failures such as the smartwatch, but a lower price point and the transition from touch to voice interface certainly would have helped. And while progress has been solid, 2018 looks to be even more promising.

“2018 will be the defining year for smart speaker adoption,” said Canalys Research Analyst Lucio Chen. “Smart speaker uptake has grown faster than any other consumer technology we’ve recently encountered, such as AR, VR or even wearables.

“While 2017 has been a banner year for smart speakers in terms of hardware sales, especially for Google and Amazon, smart speakers in 2018 will move beyond hardware, with strategic attempts to monetize the growing installed base in the US and beyond. The possibilities to do this are endless, be it discreet advertising, content subscription bundles, premium services or enterprise solutions. The technology is still in transition, and increased investments from multiple players of the ecosystem will fuel growth.”

One area which will remain difficult is China. Amazon and Google will continue to dominate this sub-sector of the tech world, but due to restrictions placed on the two brands in the country, a new ecosystem will likely emerge. Companies like Baidu, and Alibaba have a genuine opportunity to stake international claims here.

For instance, Baidu profited off Google’s inability to navigate the choppy regulatory waters of China, but international expansion would have been almost impossible. Google was already firmly established as the search engine of the world, leaving Baidu to concentrate solely on the Chinese market. The smart speaker segment is a different beast though. It is still early days, with brands jostling for top position. A new player can still emerge from nowhere and usurp the current leaders.

That said, it would take a strong proposition to upset the status quo. Amazon is currently in the lead with Alexa proving to be a very popular virtual assistant, while Google is a strong second. The Google threat to Amazon will only grow due to the ecosystem it has developed through years of relationship building in the search advertising space. We’re not too sure which one is going to win out here, but for anyone to upset the early leaders, it would have to be a very, very promising piece of AI.

The Chinese brands do have a significant advantage though. 1.379 billion in one country, with a growing middle-class, and an increasing hunger for technology. The opportunity to build a Chinese cash cow before launching an assault on the global market is staggering. If you consider mass market penetration won’t happen for a couple of years, the Chinese brands have plenty of time to develop a very strong ecosystem of hardware vendors, software developers, voice recognition providers and operators.

“Market dynamics in China can change very quickly,” said 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.”

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