Market insight VOICE ASSISTANTS
Dec/Jan 2019
ertonline.co.uk
Voice Assistants: the essential next-generation consumer interface
Commentary by Simon Bryant, Director of Research, Futuresource Consulting I
t’s been three short years since Amazon launched its Echo speaker system. During that time, sales have exceeded 42 million units and Echo’s success has paved the way for a new smart speaker category, increasing shipments of home audio devices by 50 per cent. On top of all that the category has achieved almost $3 billion in retail revenues. And let’s not forget Echo’s role in the rise of voice assistants (VAs), which are pervading a wide range of devices. Futuresource Consulting’s upcoming voice assistant report forecasts more than five billion devices will be in use in less than five years, creating a solid platform for voice- enabled content and services. Focusing on this year, 16 million smart speakers
were sold in the first half of 2018, doubling the figure achieved in H1 2017. As growth begins to shift to markets outside North America and the UK, platform share will move increasingly towards Google Assistant and Asian platforms, overshadowing Alexa as Amazon’s geographic reach remains limited.
The word from the brands Apple Homepod’s share remains small in volume, but its relatively high ASP means its share of spend is more than three times higher than its volume share. Proprietary devices continue to represent 19 out of every 20 speakers sold, while third party devices from the likes of Sonos, Harman, Sony and many more legacy audio brands compete within that one in 20 device share. This is leading many to pursue platform-agnostic, ‘works with’ and other strategies. The innovative feature-sets built into VAs, coupled with low price points, continue to whet consumer appetites for the latest tech. This is particularly
the case in markets like the UK,
US and, increasingly, China, which are all avid adopters of the latest gadgets and represent nine out of every 10 smart speaker units sold, despite the fact smart speakers are now available in many more countries. These three markets represent around 40 per cent of the wider CE market, giving an indication of the market potential of smart speakers as the rest of the world plays catch up with the traditionally large CE countries.
Privacy concerns and
regional differences Privacy concerns remain a barrier to adoption, due to the ‘always listening’ nature of smart speakers and wake-word VAs. This appears to be particularly problematic in Germany and Eastern Europe. End- user research carried out by Futuresource supports
the assumption that privacy is a key inhibitor to consumer uptake, but Futuresource expects these concerns to diminish over time as the value and convenience trade-off becomes increasingly evident to consumers. According to the 2018 edition of Futuresource Consulting’s Smart Home Devices & Appliances consumer survey, 38 per cent of non- adopters of smart speakers “can’t see a use for smart home devices”, with a third citing privacy concerns. VA vendors must continue to build compelling use cases and, perhaps more importantly, address consumers’ fears of having devices in their homes which eavesdrop upon their conversations. Apple’s focus on tackling similar issues at the WWDC event was evidence of a wider industry focus. While smart speakers already come in a variety of shapes and configurations (with screens, Zigbee, better audio and cameras) consumers are generally choosing the most basic of feature sets, with Dot and Home Mini representing almost two-thirds of Amazon’s and Google’s volumes. Although cost will be a factor, this suggests far- field access to the assistant is the primary driver of demand.
Smart speakers: a threat
from within? A longer-term threat to the smart speaker market comes from its integration into a variety of other devices, both inside the home and beyond. Industry attention is shifting from audio and smart home to the battle for the living room, particularly the TV user interface. 2018 will see a growing number of soundbars, smart TVs, media streamers, consoles and STBs incorporating far-field microphones to wake up Google Assistant and Alexa. This year, while 53 million smart speakers are forecast to sell, a further 65 million TV centric devices supporting Alexa, Google Assistant, Siri and Microsoft’s Cortana (Xbox) will also ship. Three million of these will
support far-field wake-word microphones.
Moreover, support for far field is growing at the expense of push-to-talk buttons on remote controls, as consumers seek the same hands-free access to VAs offered by smart speakers.
The living room and beyond The battle for the living room is likely to be the most hotly contested VA battle in the smart home, and the TV presents a set of unique challenges, as well as significant opportunities. From changing volume, to switching the set on and off, to requesting a movie, this could ultimately play a role in controlling the wider smart-home. As a result, VAs should mutually benefit Amazon’s,
Google’s and Apple’s existing ambitions in OTT media services and TV video connectivity, assets which include Android TV, Fire TV, Prime Video (Amazon), Chromecast, iTunes and Apple TV. Amazon’s growing influence in the entertainment space in recent years supports its bid to become the lynchpin in the living room entertainment experience, through both its own-branded services and through controlling third party apps. Its boldness and risk-taking in both consumer technology and the media space are further emphasised by its recent Premier League rights deal in the UK, where there are now over seven million Prime members. This was an expected step, but unusual for Amazon given it is a UK-only deal. As well as the Fire TV Cube media streamer with support for Alexa, Amazon is now also powering smart TVs with Fire TV built-in. Amazon is the number one vendor within the media streamer market worldwide, with over 20 per cent shipment share last year. Despite only officially being available in just a handful of countries it has overtaken its main rivals Apple and Google. However, the media streamer market in comparison to smart TV is relatively small, with 53 million streamers expected to ship globally this year compared with 155 million smart TVs.
Then, now and next
While 2017 was the year consumers and OEMs started to familiarise themselves with VAs and explore the potential, 2018 is the year when VA devices establish
themselves, growing rapidly,
with the focus of attention shifting from getting the devices into people’s homes to extending their usage and controlling household entertainment, such as music and TV, or integrating into the home’s infrastructure, controlling lighting, security and heating. Wireless speakers will remain the key gateway device for introducing VAs to consumers, with CE vendors such as Sony, Panasonic and LG launching me-too devices, while premium brands like Bang & Olufsen and Technics launch their own speakers with the emphasis on unique design. The visual display capability offered by smart displays will offer a compelling method for delivering voice activated content and will establish itself as a new form factor in the wireless speaker market. Beyond smart speakers and even CE, voice is poised to be the next generation primary consumer interface and is now being incorporated into many different devices, used for a variety of applications, and is stretching its legs beyond the consumer market.
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