To me, one of the most perplexing tech products growing with momentum is the smart speaker. Before experiencing the product, my initial thoughts were “who would ever want to spend money on one of these things?”. I could not understand why someone would spend over $100 for a product that just does whatever your phone does.
My first in person experience with a smart speaker happened this summer. One of my friends has an Echo that he frequently uses rather than playing music off his phone or hooking his phone up to a speaker. The ease of talking to Alexa and having her play the song of your choice is not only convenient, it also prevents you from picking up your phone and getting lost in it. I could see how this item became a hot commodity, and began to think about getting one for myself. However, before such a purchase, I thought I’d do some research to see what has separated the major competitors over the years.
Although Amazon continues to hold the lion’s share of the smart speaker market, Google is rapidly gaining ground. Google’s biggest bet is that the IoT, specifically its Nest home automation product, will be the future of smart speaker use. This month’s earlier release allows users to create commands such as “good night” which would trigger Home to turn off your lights and set your alarm system. They’ve also introduced a command system that allows you to make an announcement through every Home speaker in your house (something that could get annoying for those with kids). Some of the best phone related updates include displaying your number when calling through Home (rather than a blocked number) and a find my phone option that will make Androids ring even if they’re on silent (probably useless for anyone reading this but cool nonetheless).
One of the biggest turn offs to the home when I first did my smart speaker research was that I could only get a regular one for $130 (much more than the small Amazon Echo Dot for $50). Thus, in my opinion, the biggest news from Google was the introduction of the Home Mini (pictured above). Coming in at a price of $50, this is a direct attempt to grab more of Amazon’s market share. In a similar fashion to the Home topping the Echo, the actual Mini’s speaker is vastly superior to the Dot’s. The Mini, like the Home, has a cloth cover that comes in multiple colors and has been judged to be more aesthetically pleasing than the Echo and the Dot (with one reviewer stating “the Dot is a hockey puck sized device that doesn’t inspire any feelings of warmth”).
Of course, both the Home and the Mini wield the powers of Google’s money maker: its superior search engine. When connected to a Chromecast, this search engine allows users to easily browse and stream YouTube videos or Netflix shows without a remote. Users can surf the web for recipes and have the Home walk them through the instructions, saving them from continuously opening their phone to see the next steps. With rapid improvements and an ever growing market share, how can Amazon hope to compete with the Home?
Well, for starters, Amazon is still riding the wave of one of your favorite business school terms: the first mover advantage. Amazon brought the Echo to market two years before the Home. Thus, if anyone wanted a smart speaker, their only option was the Echo. This is visible in a recently conducted Edison survey: 43% of people who own a Home also own an Echo; in contrast, only 10% of people who own an Echo own a Home. This two year advantage also allowed Amazon to collect a massive about of data from smart speaker users. It has used this time and data to develop a ‘skill set’, consisting of everything from playing would you rather, starting a seven minute workout, and scanning flights through SkyScanner. Amazon also doubled down on Echo’s capabilities by partnering with Microsoft’s voice recognition, Cortana. As seen below, Home has not gotten close to Echo’s ability in this field.Like Google, Amazon is also betting that smart homes will be a major function of smart speakers. However, without its own home automation process, Amazon has used Alexa’s superior skill set to partner with a plethora of companies manufacturing smart home equipment. Although Google continues to add partners to their Home, Amazon still holds a distinct advantage in the smart home space.
Lastly, as Amazon did with their tablets, Echo has become a fantastic way to loop users into the Amazon marketplace. If I’m in the kitchen and notice I’m running low on paper towels, it’s very convenient for me to say “Alexa, order more paper towels”. Alexa will go through my past orders, see which paper towels I’ve purchased, and simply check them out on the marketplace. This saves the user the hassle of picking out a brand, size etc. It’ll be interesting to see which tech super giant wins out in the smart speaker space… or can a new entrant with speaker experience disrupt the market? Enter Sonos.
Sonos was on pace to have $1B in wireless speaker sales in 2014 when it was suddenly caught off guard by the success of the Echo. Without the brand recognition of Amazon or Google OR their superior marketplace/search engine, one would think a competitor would not stand a chance. But, Sonos has a unique strategy: leveraging the power of the platform AND partnering with all of their competitors. Yesterday, Sonos announced its first smart speaker, the $199 Sonos One. It will be powered by, guess who, Alexa. They will partner with Google next year and hope to partner with Apple as well. As a consumer, you wont have to pick one giant; you can have them all (my concern is that I, as a price conscious college student, would rather pick one and save a boat load of money, but we’ll see how it plays out).
When it comes to the platform, Sonos will first partner with close to fifty developers in order to use smart home services. In 2018, in a similar fashion to Apple’s app store, Sonos will open up to all developers. Through this, they hope to get some more help with the smart phone and creative ideas to play music throughout a house. Sonos is banking on their high quality speakers that attracted customers only a few years ago to get the momentum rolling.
Although my bet would be on either Amazon or Google, it’s safe to say the smart speaker war rages on.