Smart speakers set to grab 30% of audio market

Smart speakers will account for almost 30 per cent of the UK audio market by the end of this year, according to a new report by analyst Futuresource Consulting.

Bolstered by its Amazon Echo and Echo Dot products, online giant Amazon is now the world’s largest retailer of audio equipment. In the US, smart speakers represent nearly one out of every three shipments in the home audio hardware category.

Commented Rasika D’Souza, senior market analyst at Futuresource Consulting: “That’s a feat that was inconceivable to many just a year or so ago, and it has the potential to unsettle the entire consumer electronics (CE) industry.

“Globally, in Q1 2017 alone, 3.4 million smart speakers were sold, with a retail value of more than $440 million (£342.6m). That’s year-on-year growth of 710 per cent. When we factor in the wider opportunities for voice personal assistants (VPAs), things start to look very interesting indeed.

“In much the same way that Microsoft took over the PC market with Windows, 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 US and the UK, interest in the category has been relatively lacklustre, with only around 10 per cent of smart speakers being sold outside the US market.

Despite strengthening interest from other regions, Futuresource forecasts show that by 2021 the US will still account for more than half of worldwide volumes. This is primarily because of the intense levels of interest and associated spend on audio and smart-home solutions from US consumers 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, said Futuresource.

Added Simon Bryant, associate director of Futuresource: “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.

“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.”

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 Mr 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.”