The overall smart speaker market is expected to grow from USD 1.57 billion in 2017 to USD 11.79 billion by 2023, at a CAGR of 34.44% from 2018 to 2023.
Alexa takes over the smart speaker market
Amazon is the first company to launch Alexa smart speaker named Echo in the year 2014, since then the company has been continuously introducing new version of its Echo series in the market. Amazon has been following the strategy of reducing the cost of old product after introducing a new version of the product. This strategy allows the company to capture high margins with early adopters and brand-conscious consumers. Amazon’s sound liquidity position with a large amount of cash in hand helped it to make huge strategic investments to enhance Alexa platform. Since, consumer technology products have shorter life cycles, so Amazon Alexa had a first-mover advantage in smart speaker market. Amazon has been the trendsetter in the voice enabled speaker market.
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The emergence of smart speaker is expected to transform the outlook of wireless speaker market. Application areas for smart speaker range from smart home, smart office, commercial, and automotive applications. There has been continuous increase in demand for smart speakers, especially in smart homes, owing to increasing consumer demand for advanced and multifunctional devices. Moreover, the proliferation of smartphones has enabled the development of applications to stream music to a specific device, thus fueling the demand for smart speakers. The base year considered for the study is 2017, and the forecast is for the period between 2018 and 2023.
Driven by Amazon’s accomplishment in smart speaker market, other technical companies quickly followed suit. In October 2016 Google launched Google Home speakers, and enhanced its product portfolio with the launch of Google Home Mini and Google Home Max in October 2017. In the same duration, Harman also launched Invoke smart speaker integrated with Cortana virtual assistance.
Despite apparent dominance of Amazon and Google with a combined market share of more than 70%, the competitive landscape for both the companies is expected change in 2018, when Apple will enter in the market with its Siri smart speaker HomePod. HomePod will be equipped with the features of Siri and have wireless access to the entire Apple Music Library. Currently, Apple has fewer products and severe third-party policy, but company’s established market for smart devices is expected to drive the sales of HomePod in coming years.
Further, as gaps or opportunities emerge, tech giants moved swiftly and incisively to build the necessary capability or capacity and launched their products through inorganic growth strategies thus enhancing product portfolio and expanding their customer base in smart speaker market. For instance, companies such as Harman, Sonos, Onkyo, and Pioneer have partnered with Amazon to integrate Alexa platform into their smart speakers. While, companies such as Bose, Sony, and Onkyo partnered with Google to integrate Google Assistant platform in their smart speakers.
Moreover, to cater the increasing consumer demand and sustain growth, smart speaker offering companies are increasingly investing in R&D activities to offer smarter and more convenient devices. For instance, Amazon is offering USD 100 million in venture capital funding and a software development kit to develop its smart speaker IVA platform Alexa to third -party developers.