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Smart Speakers Set to Capture 30 Percent of U.S. Audio Market In 2017

Futuresource: voice personal assistants at the heart of new ‘CE land grab’ 7/11/2017 12:00:00 PM Eastern

Fun fact: Amazon is now the world's largest audio equipment vendor.

Thanks to the success of smart speakers with voice personal assistants (VPAs), the audio market has rebounded, and Amazon's Alexa products, with almost 70 percent of the market, have been the catalyst.

According to new research from Futuresource Consulting, that's just the beginning of a wider market transformation, with VPAs at the heart of a new CE land grab.

"In the U.S., smart speakers now account for nearly one out of every three shipments in the home audio hardware category," said Rasika D'Souza, senior market analyst at Futuresource. "That's a feat that was inconceivable to many just a year or so ago, and it has the potential to unsettle the entire CE industry. Globally, in Q1 2017, 3.4 million smart speakers were sold, with a retail value of more than $440 million. That's year-on-year growth of 710 percent. When we factor in the wider opportunities for VPAs, things start to look very interesting indeed.”

"In much the same way that Microsoft took over the PC market with Windows, how Apple dominated the MP3 market with the launch of the iPod and Google cemented its place in history on the back of its search engine, audio is becoming the new wild frontier where the outright winner could take control of the consumer's purse strings."

At present, beyond the U.S. and the U.K., interest in the category has been relatively lackluster, with only around 10 percent of smart speakers being sold outside the U.S. market. Despite strengthening interest from other regions, Futuresource forecasts show that by 2021 the U.S. will still account for more than 50 percent of worldwide volumes. This is primarily due to the intense levels of interest and associated spend on audio and smart home solutions from U.S. consumers when compared with other world markets.

However, the potential for VPAs to be the new go-to consumer interface, particularly in the burgeoning smart home sector, has created a platform race with Amazon, Apple, Google and Microsoft, with each launching new products to drive penetration of their platforms.

"With the scale of the opportunity, it's not surprising that the CE big hitters are jostling for position and trying to grab the consumer's attention," added Simon Bryant, associate director. "We're not just talking about providing a new voice interface for consumers. VPAs are poised to become the new, primary interface for all consumer electronics devices across the board. This is probably the biggest opportunity of the decade. The company that gets it right will set the agenda for the next generation of CE devices."

To date, smart speakers have been the natural home for VPA technology as they provide the perfect combination of features, functionality and affordability to introduce the concept of VPA to consumers. Moving forward, VPAs will proliferate into other device categories throughout the home, as well as cars, public places and in mobile devices.

From next year, Futuresource forecasts show that the set-top box will be the largest single category for VPAs, pushing smart speakers away from their current position at the heart of the home network.

"Look out for the coming VPA land grab, as many companies will want a piece of this new revolution," said Bryant. "Whether you're a device maker or a content provider, you won't necessarily want your customers talking to Alexa or Siri to access your services. VPA technology could give a single company the opportunity to gain influence over the whole market. Owning the user interface will allow it to promote associated software and services, building out an ecosystem and developing a lucrative partner network."

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