The smart speaker market continues to boom in this AI-driven world owing to the utilitarian nature of virtual assistant integrated speakers, which make daily life easier by handling small but inevitable tasks smartly and efficiently.
Moreover, the adoption rate of smart speakers has rapidly increased amid the ongoing coronavirus pandemic due to shelter-in-place restrictions, which have led several house-arrested people throughout the world to tap on news content, important information related to the COVID-19 pandemic, music content and other entertainment stuff just via voice commands.
Additionally, the growing proliferation of virtual assistants and improving AI skills are aiding these speakers to become more advanced with each passing day, which is further increasing their adoption rate in this fast-paced world.
Further, increasing penetration rate of Internet usage and the emergence of 5G technology are continuously aiding growth of the market for these speakers. Also, rising number of smart homes across the world is encouraging.
All the above-mentioned factors are indicating that the smart speaker space holds an upside potential and hence, companies such as Alphabet’s GOOGL Google, Amazon AMZN, Apple AAPL, Samsung, Alibaba BABA, Baidu BIDU and Xiaomi, to name a few, are making every effort to capitalize on the prospects of this particular market on the back of their robust smart speaker offerings and improving AI skills.
According to a report from MarketsandMarkets, the global smart speaker market is anticipated to reach $7.1 billion in 2020 and $15.6 billion by 2025, at a CAGR of 17.1% between 2020 and 2025.
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Stiff Competition Between Google & Amazon
Immense growth opportunities in the smart speaker market are inciting two major players, Google and Amazon, to make further advances into it.
Google’s latest launch of Nest Audio, which is the successor of Google Home, is a testament to this fact. The built-in 19mm tweeter and 75mm mid-woofer are expected to aid the adoption rate of this speaker.
Notably, the move bodes well for the company’s growing efforts toward expanding the smart speaker portfolio. In addition to Nest Audio, Nest Mini, which is also included in Google’s smart speaker offerings, is witnessing solid adoption owing to its affordable price.
Further, the company’s improving AI techniques are benefiting Google Assistant skills. This remains the key catalyst behind the company’s strengthening position in the smart speaker market.
Currently, Google’s parent company, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Amazon is riding on robust features of Echo devices, which poise it well to reap benefits from this particular space. Further, its strong focus on expanding the Echo family of smart speakers remains noteworthy. The recent launch of the all-new Echo, Echo Dot, Echo Dot with clock, Echo Dot Kids Edition and Echo Show 10 is a major positive. Notably, all these new devices hold the Climate Pledge Friendly badge.
The incorporation of Amazon’s first-generation AZ1 Neural Edge processor, which is known for accelerating machine learning applications, in the new Echo and Echo Show 10 is expected to deliver enhanced user experience. Further, Echo Dot’s built-in 1.6-inch, front-firing speaker, Echo Dot with clock’s simple LED display and Echo Dot Kids Edition’s strong parental controls are likely to drive Amazon’s customer momentum.
Moreover, improving Alexa skills and expanding global footprint are tailwinds for the company, which currently carries a Zacks Rank #3.
Apple in Fray
Although Apple is experiencing low sales of the smart speaker HomePod due to its late entry into the market, the company’s concerted efforts to grab a significant market share remain a positive.
Apple is gearing up to launch the low-priced version of HomePod, which is expected to provide it with a strong foothold in the smart speaker market.
Moreover, superior music quality in HomePod gives it an edge over other speakers in the market. Also, strong presence of HomePod in the premium market is noteworthy.
Additionally, this Zacks Rank #3 company’s loyal customer base, brand loyalty and expanding global footprint are tailwinds.
Hard to Ignore Baidu & Alibaba
The smart speaker market of China is exploding on the back of constant technical advancements in the country. Given this upbeat scenario, Alibaba and Baidu are constantly putting in efforts to advance their smart speakers, namely Xiaodu and Tmall Genie.
Alibaba’s recent plans to invest $1.4 billion for developing the next generation of technology, which will be centred around the Tmall Genie smart speaker, remains a major positive.
Further, this Zacks Rank #3 company’s partnership with Starbucks — which allows China-based customers to order Starbucks’ beverages and food via Tmall Genie — is contributing well to the adoption rate of the smart speaker.
Meanwhile, Baidu — carrying a Zacks Rank #3 at present — is gaining from the robust AI platform called DuerOS, which is likely to continue aiding the adoption rate of smart speakers.
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