Smart speakers are the current success story of the smart home. At least in the West, much of this has been driven by the success of the Amazon Echo devices. Based on Ovum's survey data, only two years since the launch of Amazon's first speaker, the device category has now entered the mass market in the US, with 21% of US respondents stating they have one in their homes (Figure 1). The figure represents a growth in penetration of 243% in 12 months. The share of respondents intending to buy a smart speaker in the next 12 months has also risen slightly in the US, from 13% to 19%. Other countries covered by Ovum's survey haven't seen quite the same growth rate, but penetration is still growing quickly, with the UK, for example, seeing a year-on-year rise of 170%, to reach 14% of respondents.
Figure 1. US, smart speaker ownership among survey respondents
Jun-17 and Jun-18
This rapid growth in a brand-new type of home device has had a significant impact on other smart-home players, with both positive and negative consequences. On the positive side, voice is a natural interface for many smart home applications, and bypassing the need for the consumer to always interact with mobile applications can help simplify the overall solution – which is important for greater adoption of smart-home devices. Smart speakers can also have a positive "ripple effect" as they introduce the mass-residential customer, probably for the first time, to basic home automation. Over time, this can stimulate customers to invest in more-sophisticated solutions.
However, smart speaker technology is still immature, and therefore there are also negative aspects that players need to be aware of and plan for:
Integration between smart speakers and external devices is not yet the plug-and-play experience consumers expect.
Control of external devices through smart speakers is often more limited in terms of functionality than that which can be achieved through dedicated apps. This means that devices may be "dumbed down" in terms of functionality – a particular issue for vendors looking to market premium products with advanced features over cheaper, simpler competitive products.
Smart speakers don't always work perfectly. This fact, in contrast to the positive ripple effect mentioned earlier, can harm the user's perceived usefulness of the whole smart-home ecosystem – potentially putting them off further investment.
Voice will never be the sole way of interacting with smart-home devices. Ovum sees continued use of mobile apps as well as greater use of other interfaces in the future, such as movement and gesture control. However, there is no doubt that voice interfaces will become more important, with 43% of homes in a developed market such as the US expected to have a smart speaker installed by end-2022. It is clear, therefore, that smart-home vendors and service providers need to be aware of, and where possible design around, all aspects of smart speakers, both good and bad, when developing their portfolio strategy.
Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.