At face value smart speakers are just another consumer tech product. As cool as it is to feel like you have your own digital assistant, on the whole they are not as revolutionary as say smartphones or laptops.
Right?
Not necessarily…
As evidenced by the sheer number of tech giants scrambling to develop and gain market share for their own smart speakers, smart speakers are going to be way bigger than people think.
Google, Amazon, Apple, Samsung... they are all at it. However, many analysts note that these speakers are loss making. So, why develop these products? And, why sell them at such a low price?
One must first appreciate what these products do. They essentially become a proprietary intermediary in all digital consumer interactions. In essence: if it is not your speaker a consumer is using then another company has the exclusive opportunity to engage with that consumer.
As an issue for the tech giants this is compounded when we think about the nature of voice interactions. Unlike, for example, a web search, users have no input on where they end up; they verbally make a request and are taken there instantly by their digital assistant. Consumers thus forfeit their agency when it comes to selecting the destination of their requests.
So part of this desire to develop smart speakers is born out of this ambition to control this ‘destination’. For example, if you want to buy a pair of shoes, Amazon will want you to visit its marketplace, it will thus take you there immediately upon request.
Conversely, this activity could be seen to be defensive. Many of these companies’ businesses were built off their legacy franchises (e.g. google’s search engines). Lets assume Amazon come to dominate the market in smart speakers. They could then develop a search engine and use Alexa to gobble up Google’s market share in the search engine space, given that Alexa could just refer to an Amazon search engine, instead of Google's, when questioned.
Furthermore, there is a deeper historical factor driving this activity. Smart speakers represent an entirely new UI (user interface). Historically the emergence of these UI’s (graphical interfaces, smartphones etc) have heralded a technology platform shift.
These shifts allow for companies to create their own segment dominance set around these new UI’s. Just think of how Apple came to overtake Blackberry in the phone market with its touchscreen phone (a new UI).
Tech companies are more than aware of this and none of them want to be left behind.
So, when you are next ordering off Alexa or having an infuriating conversation with Siri, remember: you are participating in a multi-billion dollar conflict which could up-end some of the biggest names in tech.
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