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Straight Talk Consumer and Entertainment Services

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There is no doubt that smart speakers have become the new must-have consumer electronics gadget wherever they've become available. Per our latest smart home research, there are more than 30 different brands of speakers that feature Amazon Alexa or Google Assistant or both, mostly coming from established audio brands. However, Ovum's recent smart home research shows that this success is to be short-lived, with smart speaker sales projected to decline from 2020 onward in the US and the UK, and from 2021 in China.

What is starting to happen with smart speakers is very reminiscent of what happened to tablets at the end of 2014, when sales started to decline four years after the launch of the iPad. A combination of low prices and wide-scale availability meant that consumer demand was met rapidly, long before anyone thought about replacement sales. Smart speakers are following the same path by becoming incredibly cheap – Amazon Echo Dot and Google Home Mini were both available for less than $30 during Black Friday in the US last year. The result is that more than 20% of the US population now has access to a smart speaker. While one might say that the remaining 80% should help sustain some growth for the coming years, it has become apparent through various surveys that approximately half of the population remains unconvinced by smart speakers. Part of this result is driven by the questionable usefulness of voice assistants, and some level of distrust fueled by the recent Facebook/Cambridge Analytica debacle.

Amazon and Google have done a great job at bringing their voice assistants to third-party devices – we recorded more than 200 Alexa-enabled devices listed on at the time of writing. From TVs and alarm clocks to lighting fixtures and smoke detectors, a growing number of traditional home devices now feature voice user interfaces and compete with smart speakers. The future of the smart speaker market will not be led by Amazon Echo or Google Home. In fact, we predict that both Amazon and Google will stop making smart speakers by 2020. Voice AI will continue to have a key role to play in the home, but it will take many shapes other than a speaker.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

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