Struggle between China’s internet giants continues in the smart speaker sector, 500,000 billion new users targeted
Although Ruan Long has been working as an internet professional over many years, he was still amazed at the unexpected usage of the smart speaker he recently brought home.
Ruan’s second child has started interacting with the gadget, even as an 18 months toddler. Although he is not able to pronounce words correctly. The smart speaker will often ignore him as he mumbles the wake-up word incorrectly as ‘Aodu’ instead of ‘Xiaodu.’
But for Ruan’s first daughter, who is a second-grader, the smart speaker is a very useful utility. In fact, it is becoming a nuisance at times. Imagine, the speaker often takes Ruan’s place and read stories, play music, and even answer several questions. Many times, Ruan has to take the smart speaker away to prevent her from cheating during her homework.
Ruan, like other millions of Chinese families, has embraced the nascent technology that uses internet and online services via voice commands. As such, they can circumvent the tedious procedure of typing Chinese characters or Pinyin for computing tasks.
This development is Challenging for Chinese companies because more people are shifting from computers and smartphones text input methods. The promising voice command computing technology has the potential to acquire a large userbase. For instance, a report from China Intent Network Information Center confirmed that 562 million Chinese that are not connected to the Internet. Out of this number, 87% cited the lack of computing skills and inability to write Pinyin as the cause.
Besides, the AI-driven voice input can drive a new generation of gadgets that make up the Internet of Things (IoT). This new opportunity has caught the attention of dozens of Chinese startups, including Google-backed Mobvoi, and Hangzhou-based Rokid, which has big companies like Tencent and Temasek among its investors.
According to data from Canalys, 10.6 million units of smart speakers were shipped from China in the first quarter of 2019. As such, the shipments of smart speakers in China has surged by 500% YoY. This figure beat the US for the first time, which is the largest market, owning 51% of the global market share. It is interesting to note that three out of the five largest smart speaker vendors in the world are based in China. These companies are Xiaomi. Baidu, and Alibaba, which is also the parent company of South China Morning Post. However, the first two leading companies are still Amazon and Google, which are US companies.
According to a statement from the vice-president of mobility at Canalys, vendors in China invest huge capitals in dominating the market. This explains why development in China is often rapid. Internet service providers such as Baidu, Alibaba, and Tencent are the drivers of this development strategy. These companies spend billions on traffic and lead acquisitions. They know how to reach out to the ideal customers fast.
Obviously, AI-speakers are the next major gateway to online content and services. They also provide additional benefits, such as speech patterns and consumer preference, while retaining the user within the company’s ecosystem of services.
During an event to launch three models of smart speakers this month, Jing Kun, who is the vice president of Baidu and the general manager of MSart Living Group, made an interesting disclosure. He said the recent trend in the world of smart speakers can be compared with the emergence of mobile and smartphones. Their usage became versatile beyond calling, shopping online, watching media, or browsing the internet.
Antonio Wang, who is the associate vice-president at IDC, China’s client system research made a fundamental observation. He said that the existing ecosystem of services of the leading players gives them a competitive advantage in the marketplace. However, he also affirmed that the present price war among the smart speaker markers in China is driven by the need to attract a large userbase.
Alibaba sold the cheapest model of smart speaker for 99 yuan (US$14.40) during the Singles’ Day online sales campaign last year. After that, Baidu offered a model for a one-time fee of 89 Yuan. In contrast, the Echo Dot, which is the basic version of the Amazon Echo series that uses the Alexa voice assistance, costs 25 USD.
Wang forecast that the price competition will continue to get stronger in the short-term as the market continues to expand and reach up to 400 million homes. Wang believes that the market will grow exponentially this year, he foresees a situation where 25% of homes will have a smart speaker, while some will have two or three units.
The Smart speaker innovation will also play a vital role in expediting IoT technology because of its AI-driven technology that enables machines to understand human speech. This development makes room for seamless interaction with electronics at home, cars, and other gadgets besides smartphones.
Miffy Chen, who is the general manager of Alibaba AI labs, explained that the more humans interact with machines, they become smarter and provides more value for the users. He said that the voice assistant technology is developing at a rapid pace, and it will soon become an integral aspect of our daily living.
Just last month, Alibaba announced its partnership with leading automobile manufacturers Audi, Renault, and Honda. The deal will see Alibaba integrating voice command systems into novel connectivity-featured models developed by the automobile manufacturing brands.
Alibaba-owned Tmall Genie smart assistant has been installed in more than 600 appliances since it was launched in 2017. Its application ranges from car brands, homes, hotel. And many more. Its relevance is versatile, it has been used for entertainment, book reading, shopping, and even food delivery!
IDC’s Wang sees the smart speaker as an innovative means for internet giants to leverage data to gain more userbase and retain them within their ecosystem.
The struggle for leadership in the smart speaker industry has also driven these rivals to build an ecosphere of services for their userbase. In this scenario, each company provides a broad range of services such as food delivery, online shopping, ticketing, video streaming, and lots more.
Data from Catalyst shows that Baidu is currently taking the lead out of the dozens of Chinese smart speaker vendors. The company shipped 3.3 million units of smart speakers in the first quarter of 2019 alone. Baidu is the third-largest supplier of smart speakers having a market share of 16%, Alibaba follows with 15.5%, and Xiaomi is next with 15.4%.
Baidu’s Jing reveals that over the last 18 months, the DuerOS voice command operating system of Baidu has been used on over 400 million devices, which include cars, watches, speakers, and smartphones. In June alone, the smart assistant that powers the OS processed a whopping 3.6 billion user queries.
Baidu’s strategy focuses on using smart speakers to increase the revenue from their paid content services and co-branding business with other online merchants. Jing also affirmed that over 30,000 commercial items are available through Baidu Speakers. Typical examples are Meituan food delivery and a kid’s story app.
The smart speaker vendors are looking to cover other demographics besides the schoolchildren and toddlers. For instance, 92-year-old Jiang Peisheng, a retiree in a small city called Baoji, in the in Shaanxi province, owns a smart speaker. He said the device gifted to him by his granddaughter is his major companion and the only access to the internet.
Jiang cannot use smartphone apps due to his poor eyesight. But he uses the smart speaker to play music, search the internet, listen to jokes, check weather updates, and set reminders for his medications.
The advent of the smart interactive speaker brings the power of the internet to about 40 % of its population that was previously unreachable. People like Jiang who does not own a computer or have Pinyin skills can now have easy, and inexpensive access to the internet.Source