Smart Speakers Set to Capture 30% of US Audio Market in 2017, VPAs Poised to Create New Market Opportunities

Smart Speakers Market Analysis and Commentary




07 Jul 2017 - The allure of smart speakers continues to attract the attention of consumers, bucking the wider audio market's slowdown and even reinventing Amazon as the world's largest audio equipment vendor. However, that's just the beginning of a wider market transformation, with voice personal assistants (VPAs) at the heart of a new CE land grab, according to a comprehensive new market report from Futuresource Consulting.

"In the US, smart speakers now account for nearly one out of every three shipments in the home audio hardware category," says 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 CE industry. "Globally, in Q1 2017 alone, 3.4 million smart speakers were sold, with a retail value of more than $440 million. That's year-on-year growth of 710%. 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 US and the UK, interest in the category has been relatively lacklustre, with only around 10% 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 50% of worldwide volumes. This is primarily due to the intense levels of interest and associated spend on audio and smart home solutions from US 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," adds Simon Bryant, Associate Director at Futuresource Consulting. "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," says 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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Notes
Futuresource Consulting is a specialist research and knowledge-based consulting company, providing organisations with insight into consumer electronics, digital imaging, entertainment media, broadcast, storage media, education technology and IT. With a heritage stretching back to the 1980s, the company delivers in-depth analysis and forecasts on a global scale, advising on strategic positioning, market trends, competitive forces and technological developments. www.futuresource-consulting.com

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