Now with added video!
Internet giant Google ramped up its involvement in the consumer hardware space with the launch of new Pixel branded smartphones and tablets as well as a home hub.
The Pixel 3 and its XL variant offer both an industrial design and spec upgrade on their predecessors. Initial impressions indicate the redesign is well received and the spec upgrades are significant. There also seems to be more AI stuff going on, including a call screening functions that taps into Duplex technology to save you having to interact with a caller if you’re not sure about them.
Google debuted a new device category in the form of the Pixel Slate – a tablet running Chrome OS that seems to be positioned as a direct competitor to Microsoft’s Surface product range, with an emphasis on hybrid laptop functionality. Once more initial takes seem positive, especially about its attempt to be the best of both worlds, although the full range of requisite peripherals and accessories does make it an expensive proposition.
Lastly we have the Home Hub, which is an AI-driven smart speaker with a 7-inch screen that will compete with equivalent products from Amazon and Facebook. One big difference is that Google is making a virtue of it not having a camera installed in an apparent bid for people to take it into the bedroom or even the bog. There’s also a physical mute switch to prevent the device listening to you, which seems like a good say to allay fears about being spied on by Google, but does call into question what the point of the device is.
“Our goal with these new products, as always, is to create something that serves a purpose in people’s lives – products that are so useful they make people wonder how they ever lived without them,” said Rick Osterloh, VP of Hardware at Google. “The simple yet beautiful design of these new devices continue to bring the smarts of the technology to the forefront, while providing users with a bold piece of hardware.”
The Pixel 3 starts at £739, with the XL coming in at £869. The Slate starts at £549 without peripherals, while the Home Hub will set you back £139. Google has managed to throw down the gauntlet to the majority of the consumer tech world with one set of launches, which is fun, but time will tell whether any of them are able to claim significant market share. Here’s a vid.
Years usually pass before the world realises a technology breakthrough actually happened and it catches on; the voice user interface might just have arrived at that watershed moment.
The fantastic breakthrough of touchscreen mobile phones is often attributed to Apple, though if you go back to 1992 IBM unveiled a phone called Simon which featured the first touchscreen. Apple didn’t invent the concept of touch screens, it simply innovated, making the iPhone a genuine smartphone as opposed to a PDA. This might seem like an odd introduction, but the same trend is emerging in the smart speaker world.
Amazon and Google did not invent the concept of the voice user interface, they simply used their brands to effect change and offer a product which was dutifully adopted by the masses which call themselves fans. In releasing their own smart speakers, the two internet giants did what other companies couldn’t; they normalised the voice user interface.
According to Nielsen’s MediaTech Trender survey, the smart speaker has penetrated the mass market and is normalising the concept of the smart home, as well as the idea of your voice being the control function. Across the US, 40% of homes now own at least one smart home device, with 24% owning a smart speaker, up from 22% in the previous quarter. Of those who currently own a smart home device, 65% plan to purchase more. Looking at the speakers themselves, usage is up, the average user interacts with the device for 72 minutes on the weekend and 65 minutes during the week, while 81% of users report using voice-command searches for real-time information, such as weather and traffic conditions, during a typical week. The more normal it becomes to use your voice in the home, the more acceptable it becomes elsewhere in the world.
Another interesting statistic from the report are the services synced to the speakers. Music streaming services are unsurprisingly the most popular, 53%, while the second most popular is shopping apps at 52%. With the user seemingly becoming accustomed to ordering goods through the smart speaker, there are a horde of new opportunities emerging, from grocery shopping to on-demand purchases linked to advertisements.
Finally, the most device synced to the smart speakers is the smartphone. This might seems like a very obvious statement, though only 32% of the respondents have linked their smartphone to the device. This is a small percentage of what is possible, though the potential to learn more about these individuals who have synced their devices is quite exciting. The virtual assistant is no-longer limited to the users home and can start to learn about habits in the big, wide world. This offers a much more in-depth opportunity to create valuable, personalised services.
As it stands, the smart speaker is little more than an entertainment product. 90% of users listen to music on the devices, 81% search for real-time information such as the weather, 68% listen to the news and 68% use it for alarms or timers. However, these devices are introducing new concepts and features which are gradually becoming accepted and normalised by the user. The voice user interface is an incredibly important one.
Just like the touch interface opened up new opportunities to make money, the voice interface will do the same. But this is a while down the road, mass adoption of both new devices and the normalisation of new concepts need to take place first. New ideas open the mind up to even more new ideas, including services and products, as well as blurring the lines of what would be considered intrusive or unacceptable. The smart speaker is playing a critical role here.
Now with added video!
Amazon has unveiled a host of new features and skills for its Alexa virtual assistant, edging the living room closer to the intelligent dream we’ve all been promised.
While you cannot argue with the gimmicky entertainment brought by virtual assistants, you have to wonder whether it is anything more than five minutes of entertainment or making our lives easier in the very smallest (and often irrelevant) of ways. The new features and skills released by Amazon are starting to add some clarity to the smart home as we all imagine it from watching too many re-runs of Back to the Future 2.
“The Alexa service is always getting smarter, whether you’re using the Echo you bought three years ago or an Echo Show you buy tomorrow,” said said Tom Taylor, Senior VP of Amazon Alexa. “We have thousands of engineers and scientists inventing on behalf of customers, and today we’re excited to introduce even more features to help make customers’ lives simpler, safer, and more convenient.
“Soon customers will be able to manage their email, easily secure their home, watch the shows they love on Echo Show, and make their daily routines more productive – all just by asking Alexa.”
Right now virtual assistants are very limited in the way they work. This is partly due to customers not utilising the capabilities to full potential, though the breadth of features and skills does need to be fleshed out. It might be cruel to point the finger at Amazon, it is still early days after all, but with the big promises made in advertisements, the virtual assistants are a bit drab. That said, some of the new features do look pretty good. The difference is underlying interaction with other applications and features.
Take the new location based reminders. It’s a simple idea, but linking reminders up with GPS adds value. How many times have you walked home from the tube station, only to realise you forgot to buy peas when you are half-way through cooking your dinner. Now you can ask Alexa to remind you to pick up peas, post a letter, drop off the dry cleaning or buying a last minute birthday present, when you’re passing by the relevant establishment.
The routines is another area which been improved as well. This is an interesting feature which can be adapted to each individual. The morning playlist might depend on the day for instance, or lights are triggered depending on motion and your routine. Both of these examples take the virtual assistant away from the simple command-action scenario and factor in other variables which are not dependent on proactive actions from the user. It is actually starting to become smart.
Later in the year you’ll start to see some even more interesting features with Alexa actually making sensible suggestions depending on your actions and commands. For example, if you activate the bedtime routine by saying ‘Good night Alexa’, the white noise playlist will kick in, and Alexa might ask you whether you want it to switch off the living room light you left on. Features like this will make the virtual assistant much more than a gimmick.
The next step will be deeper integration with other applications such as Outlook calendars. When Alexa prompts you to change your alarm the night before because it has spotted an early morning meeting, it’ll start to be a genuine assistant. One step further would be linking to weather and travel update services so it can proactively change the alarm in the middle of the night if it decides your commute will take longer than it usually should.
The promise of virtual assistants has been very glorious, and so far it hasn’t met the expectations. But updates like this are making Alexa an genuinely helpful and interesting proposition.
Google has been preparing its suppliers for the launch of a smart speaker equipped with a display screen as it targets Amazon’s dominance in the build up to Christmas.
According to Nikkei Asian Review, the new device will continue to promote the voice user interface, though touch could be an option, and will expand the entertainment options and functionality. Aside from YouTube now being a relevant platform, the door is now opened to mapping features, as well as eCommerce.
“Google targets to ship some 3 million units for the first batch of the new model of smart speaker that comes with a screen. It’s an aggressive plan,” one source stated.
Google currently sits in second place in the smart speaker market, though it is catching Amazon, which has seen its dominance slightly erode over the last three months. While this is encouraging for Google, it should also be noted the entry of mainstream brands will also erode this market share and present a much sterner challenge, as consumers find comfort in the familiar.
Demand is clearly booming across the world, Google and Amazon did an excellent job in normalising the product over the last 12 months, though which will be the dominant virtual assistant is still an open question. This is where the real cash will be made, and the introduction of speakers certainly creates numerous opportunities to make money.
New estimates from Strategy Analytics have Amazon maintaining its lead in the smart speaker market, but it’s starting to erode as more mainstream brands hit the market.
Being first to market has its advantages, but these leads are rarely maintained. Getting a jump on the early adopters of course offers a massive advantage, but more often than not the money is made in mainstream market penetration. Unfortunately for those who attempt to use the first-to-market strategy as a means to break the status quo, Joe and Jane Bloggs on the street usually revert to brands they are comfortable with.
“Amazon and Google accounted for a 69% share of global smart speaker shipments in Q2 2018 down from over 90% in Q2 2017,” said David Watkins of Strategy Analytics. “The drop is not only a reflection of growing competition in the smart speaker market but also Amazon and Google’s inability to break into the fast growing Chinese market that is dominated by local powerhouse brands such as Alibaba, JD.com and Baidu.”
Looking at the estimates, Strategy Analytics believes Amazon’s global smart speaker share of shipments fell to 41% in Q2 2018 from 44% in Q1 and 76% in Q2 2017. Google has increased its share to 28% in Q2 2018, up from 16% during the same period last year, while technology giants Apple and Samsung are intensifying competition, as are more traditional audio brands such as Sonos and Bose.
Amazon and Google are still the dominant players as it stands, though companies like Apple and Samsung, both of whom made their names in the hardware space, will test out brand loyalty with their own products. That said, consumers in the mainstream market, the majority who have more basic understanding of the technology industry, will like lean towards brands such as Sonos and Bose. These are common names in the audio market already and brands people have been buying for years; reputation and credibility means a lot for consumer purchases.
With the two market disruptors starting to flag out front, we suspect market share will gradually become more even, with Amazon and Google eventually falling back further. But do they actually care?
We’ve said this before, but these are two companies which do not have an outstanding pedigree in the hardware markets. It has not been a cash-cow for the pair, who have both focused on software and services. We believe this will be the long-term focus of both Amazon and Google.
Launching low-cost devices onto the market and capturing the attention of the highly-vocal tech enthusiasts was an excellent move. It normalised the products and demonstrated to the traditional manufacturers there is money to be made in smart speakers. Now the rest of the industry are playing catch-up, some might suggest it is mission accomplished. The pair can go back to focusing on the aspects which they are more comfortable with.
Both Amazon and Google make cash through the desires of consumers to have more of their lives online. They operate in the virtual world, making money off the ecosystem and creating free services which are attractive to the consumer. In Google’s cash it is the search engine, as well as video platforms and mapping products. For Amazon, it’s the dominant eCommerce platform, and more recently it has been venturing into subscriptions. For both the idea is simple; create an idea which is user friendly, before making money off the connection between consumers and third-parties.
The same business model is possible in the smart speaker world. Whether it is referrals for a takeaway or ordering weekly groceries, Amazon and Google can make money off the digital experience, not simply selling devices to consumers.
The issue to start with that the devices weren’t present in homes around the world, but that hurdle seems to have been conquered. With the products gathering momentum, the mission of normalising day-to-day uses of the virtual assistants can begin. This is where Amazon and Google will make billions in recurring revenues.
While Apple CEO Tim Cook was declaring the company is now the first to exceed the mystical $1 trillion market valuation, new research suggested its HomePod speakers were nothing more than an also ran.
Estimates from Consumer Intelligence Research Partners suggest Amazon is clearly in the lead with 70% market share in the US, unsurprising perhaps, Google is in a solid second on 24%, while Apple is down in third with 6%. Considering Apple’s HomePod has just been on the market for a few months, while Amazon has been present for more than two years, some might argue this is a successful launch, though how much potential is there for Apple?
Of course, the smart speaker market has massive potential on the whole. With the digital economy started to take a strangle hold on every aspect of our daily lives, it might not be too long before a smart speaker is a common feature in the home. The research also estimates 34% of Amazon Echo users and 31% of Google Home users own more than one device in their homes. The issues here is timing, pricing and competition.
Apple was always going to struggle to make an impact in the beginning because of timing. It came to the market months after Amazon and Google had already snapped up all of the early adopters and social media influencers. Of course, it does have its very loyal army of iFollowers, but it does appear the damage has already been done. The second issue is price.
Just as Amazon and Google are dropping prices for the devices, the HomePad remains significantly more expensive. Apple does of course have a premium brand to protect, therefore dropping the price too much would cause damage elsewhere, but it is also playing a different game.
Apple is primarily a hardware company, while Amazon and Google are software and services. Yes, Apple is making progress with its software and services division, but though this is the company sweating existing customers, a sound business model, but limited when you consider the breadth and accessibility of Amazon and Google services. The two internet giants are perhaps looking at the speakers as nothing more than a loss-leader, to encourage the growth of smart speakers and drive normalization of the products. Once the products have become a normal part of our lives, the digital assistants can start making money for them.
Apple might be compared to the pair for the moment due to its pretty useless digital assistant, but its DNA is in hardware. If the business model is reliant on selling hardware, the smart speaker segment could be a tough one to crack as specialised competition begins to emerge. This leads us onto the final point, competition.
Sonos is one of those companies, having just completed an IPO, finishing the first day at $19.91, 32% higher than the starting share price. Though there is a suspect relationship between Sonos and Amazon, the internet giant can switch off its Alexa service with limited notice, Sonos has said it will also begin supporting the Google Assistant before too long. This is the future of the smart speaker market; specialised designers and manufacturers, with recognisable brands in the audio world, creating the hardware and leaving the software component open to the consumer.
Apple might be able to call on its loyal army of iCultists, but soon it will not only be competing with Amazon and Google, but also Sonos, as well as the likes of Bose, Pioneer, Kenwood and numerous other specialists. We suspect Amazon and Google might fade from the device segment soon enough, once there is a high enough market penetration for hardware, why not focus on the key competence of making money through software and services, but Apple will have to go toe-to-toe with the specialists.
This is not to say Apple will lose, but diversification is difficult. Unless you get a jump-start on the market, like Amazon and Google did here, you will always struggle to impose your product against specialised brands who have an established reputation with consumers. Apple will have to sweat the iLifers hard to ensure the HomePod products have a more successful mission than its smartwatch product.
Research firm Strategy Analytics has published its latest numbers on the global smart speaker market and they reveal rapid growth and diversification.
Amazon, of course, was the first mover in this market with its Alexa-driven speakers sold aggressively through its own dominant retail channel. As you can see from the table below it pretty much owned the smart speaker market a year ago, but the situation is very different today. With Google, Alibaba and Apple among the tech giants to have made their move in that time.
“Amazon and Google accounted for a dominant 70% share of global smart speaker shipments in Q1 2018 although their combined share has fallen from 84% in Q4 2017 and 94% in the year ago quarter,” said David Watkins of SA. “This is partly as a result of strong growth in the Chinese market for smart speakers where both Amazon and Google are currently absent. Alibaba and Xiaomi are leading the way in China and their strength in the domestic market alone is proving enough to propel them into the global top five.”
“Further strong growth in smart speaker sales confirms our view that this new market is far more than just a flash in the pan,” said David Mercer of SA. “Today’s smart speakers are by no means the finished article but they have captured the consumer imagination and we will see rapid evolution in design, functionality and associated use cases over the coming years. We are clearly heading towards to a time in the not too distant future when voice becomes a standard mode of technology interaction alongside established approaches like keyboard, mouse and touchscreen.”
Mercer is spot on about the voice UI, although it could end up being most important in cars and wearables, rather than the living room. It’s also worth juxtaposing this market with smartphones, which amounted to 345 million units in Q1 2018. While the young smart speaker market is growing rapidly, it’s still a faction of the size of smartphones and is unlikely to ever achieve those kinds of volumes because of its relatively limited utility.
|Global Smart Speaker Market by Vendor: Q1 2018 (Shipments in Millions of Units)|
|Vendor||Q1 ’18 Shipments||Q1 ’18 Market Share||Q1 ’17 Shipments||Q1 ’17 Market Share||Growth Y/Y|
|Source: Strategy Analytics Smart Speaker service|
Amazon is in the lead, but announcements at CES could see momentum gathering in the Google offices, as the pair battle for market share in the fast emerging smart speaker space.
At the annual CES event in Las Vegas, Google has gone big. Marketing is prominent, announcements will be glorious and partnerships are starting to stack-up. The latest incident of back-patting has seen the internet search giant integrate its virtual assistant into speakers from a large number of manufacturers, including (but not limited to) Anker Innovations, Bang & Olufsen, Braven, iHome, JBL, LG, Klipsch, Memorex, and SōLIS.
And the team are not stopping at speakers. Several manufacturers will be producing smart displays, featuring the Google assistant, it will also be plugged into your Android phone, with the option of downloading onto your iPhone. The assistant is also coming to Android Auto, where Google is working with auto makers to integrate the assistant directly into their cars. Over the next twelve months, the team is also working with the likes of Jaybird, JBL, LG and Sony to feature the assistant into headphones.
Soon enough, some might be able to operate without a smartphone. Your smart speaker is connected to the rest of your smart devices, while your car will automatically be plugged into your life, as will headphones. All devices, from your TV, to your smart display unit, will be able to have the functionality of a smartphone, as will (to a degree) your car and headphones. If you had a basic device which was only configured to watching video or playing games, you could run your life without a smartphone. Google could potentially cut the device manufacturers out of the value chain.
This is where we think Google is starting to gain an advantage in the smart speaker/virtual assistance space; it has more friends than Amazon. We’ve speculated before that Google and Amazon were only venturing into the hardware space to show the manufacturers there is a consumer appetite for the devices; a loss leader PR stunt to stimulate the market. The theory here is that the real win for Google and Amazon will be to have their virtual assistant in as many places as possible, focusing on the software and services revenues, but the electronics manufacturers needed a bit of nudging.
With more manufacturers entering the smart speaker space, the price point of the devices will come down, which will make them more attractive to consumers. There will also be consumers who are more confident in buying electronic goods from more traditional names. Finally, there will come a stage where smart speakers are the standard. With dozens of new products flooding onto the market, in partnership with Google, the Google virtual assistant will start to interact with a much larger number of consumers.
The more consumers Google is interacting with, the more influence its internet advertising model will have on the space. The more advertising there is, the more money Google has to develop both its hardware and software ecosystem, both of which will already be substantial. It might be a slow burner, but you can see how Google could gain the upper hand in this potentially lucrative space.
We have a feeling that Google will prevail, but that is far from an Amazon write-off. Amazon is one of the most powerful and influential brands in the world, led by one of the most innovative CEOs. Only a fool would categorically claim Amazon cannot take advantage of its current market leading position, but we have a Google hunch.