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Source / Zhidx (ID: zhidxcom)
Written by / Yu Yang
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Highlights: Global sales will exceed 30 million this year, a crazy feast for smart speakers!
2017 is destined to be an extraordinary year for the smart speaker market. This year, smart speakers began to gain popularity in the United States, this year they started to trend globally, and this year, the domestic market achieved a million sales, marking the beginning of a new era.
With the arrival of the foreign “Black Friday” (the day after Thanksgiving, November 24 this year) to “Cyber Monday” (November 27 this year) and Christmas (November 25), global sales of smart speakers are expected to explode again by the end of the year! Amazon’s Echo is expected to sell 8 million units between Black Friday and Cyber Monday, with a price drop of at least $20 per unit, totaling $160 million. If Jack Ma spent 400 million on Double Eleven for smart speakers, CEO Jeff Bezos is set to spend at least 1 billion on this smart speaker promotion!
Zhidx predicts, based on information from various industry sources, that by the end of this year, global smart speaker market sales will approach or even reach 30 million units, representing a year-on-year growth of over 5 times, dominated by internet giants like Amazon, Google, and Alibaba. Additionally, the domestic smart speaker market is expected to reach 2 million units this year, with a forecast of 5 million units in 2018.
Let’s start with the current Black Friday and see how various smart speakers are preparing for the battle, and how the global market will reach 30 million units in sales by the end of the year, showcasing the crazy feast of smart speakers worldwide!
The Crazy Feast Begins with Black Friday
This year on Double Eleven, Alibaba launched the Tmall Genie smart speaker, originally priced at 499 yuan, at a promotional price of 99 yuan, with an official sales target of 1 million units, showcasing the power of capital. However, compared to the discounts seen during Black Friday and Cyber Monday abroad, the promotional efforts for domestic smart speakers seem relatively minor.
According to Zhidx observations, during the Black Friday shopping festival abroad, players like Amazon, Google, and Sonos offered discounts of up to $95 (about 630 yuan), with $50 (about 330 yuan) and $20 (about 132 yuan) discounts being quite common, indicating that the overall discounting for smart speakers abroad is significantly higher than in the domestic market.
For instance, the old version of Amazon’s Echo, originally priced at $164.99, is now on sale for $69.99, a direct discount of $95. However, industry insiders revealed that the old version of Echo has been discontinued, perhaps for a final clearance sale?
▲ Amazon Echo Cyber Monday promotional price
Additionally, the Amazon Echo Dot is discounted by $20 (about 132 yuan), priced at $29.99; Echo Plus is down $30 (about 198 yuan), priced at $119.99; and Echo Show is reduced by $50 (about 330 yuan), priced at $179.99, with discounts all exceeding 100 yuan.
Besides Amazon, Google is also not holding back on discounts. This year, the Google Home Mini was reduced from $49 to $29, and if purchased from Bed Bath & Beyond, customers can also receive a $10 gift card from the store, making the price drop to $19 (about 125 yuan), which is quite a bargain. Furthermore, the original price of Google Home was $129, now sold at a $50 discount, indicating that Google is matching Amazon’s discounting efforts.
▲ Google Home Mini promotional price
Other smart speakers have also joined the discount campaign. For example, Sonos has reduced the price of Sonos Play 1 from $199.99 to $149, offering a $50 discount. With the Christmas season (from Black Friday to Cyber Monday and then to Christmas) approaching, it is expected that the discount period for foreign smart speakers will be extended, leading to higher sales.
According to Martin from Forrinx, the sales of Amazon Echo series smart speakers on Black Friday were about 4.7 million units, and it is expected that after Cyber Monday (from Black Friday to Cyber Monday), the sales of Amazon smart speakers will reach 8 million units. If this data holds true, it will once again break the sales record for Amazon Echo.
Martin also revealed to Zhidx that Amazon has made impressive progress in internationalization. The Echo Dot and New Echo sold out on Black Friday in the UK, and the same happened in Germany. Additionally, in new markets like Japan, India, and Canada, the growth rate of smart speakers is also rapid.
However, the only regret is that the newly launched Echo Spot with a screen will be delayed until mid-December due to insufficient production capacity and will not be discounted.
Global Market Expected to Reach 30 Million Units by Year-End
The month from Thanksgiving to Christmas is a peak consumption period in the United States and other countries, and smart speakers will take advantage of this momentum to harvest the final wave of sales by the end of the year.
▲ From left to right: Dingdong Speaker A1, Amazon Echo, Google Home, Tmall Genie X1
According to You Renjie, Deputy General Manager of MediaTek and General Manager of the Home Entertainment Product Division, the global smart speaker market is expected to reach a scale of 25 to 30 million units this year.
Zhidx has also learned from industry insiders that Foxconn has produced 20 million units of Echo Dot for Amazon this year, which have been gradually arriving at Amazon’s warehouses around August, and this figure does not include other products in the Echo series. After observing Amazon’s official website post-Black Friday, it is evident that except for the Echo Spot, which has production issues, the main products like Echo Dot, New Echo, and Echo Plus are all in stock, indicating that Amazon has prepared sufficient production capacity for this Christmas season.
Zhidx learned that among the 20 million Echo Dots, some are for fulfilling orders from Amazon Prime Day (mid-July this year) that have not yet been shipped, while others are prepared for the promotional season after Thanksgiving. Considering that the Echo series products surpassed 10 million units on Prime Day, combined with sales data from the beginning of the year, Amazon Echo products sold about 4 million units from January to July, and with Amazon’s relatively sufficient production capacity, international layout, and the expected sales of about 8 million units from Black Friday to Cyber Monday, Echo’s sales are expected to exceed 20 million units by the end of this year.
Additionally, industry insiders estimate that Google’s efforts and promotions in the smart speaker market will lead to sales of 5 million units this year. In the domestic market, with the arrival of Double Twelve, players like Alibaba, Xiaomi, and JD.com are expected to contribute to a market sales figure of 2 million units this year. It is evident that the domestic smart speaker market may see another wave of competition during Double Twelve.
From the above analysis, we find that just from Amazon, Google, and the domestic market, smart speaker sales are expected to exceed 27 million units. Adding many other smart speaker devices that integrate with Amazon’s Alexa voice assistant and Google Assistant, the global smart speaker market is likely to reach the 30 million unit mark by year-end. This aligns with the reference range provided by You Renjie from MediaTek.
However, it is clear that foreign giants like Amazon and Google, as well as domestic players like Alibaba, JD.com, and Xiaomi, will occupy the vast majority of the smart speaker market, accounting for over 90%, while other small and medium players will only share a meager market share.
Global Market Expected to Grow Over 5 Times Year-on-Year
Zhidx, through online data and information from industry insiders, has created a chart of the cumulative market sales and expectations for Amazon Echo, which is for observational reference only and does not fully represent actual conditions.
▲ Amazon Echo cumulative sales statistics/forecast chart
From observations, we can roughly estimate that Amazon Echo sold about 3 to 4 million units in 2016, while the total sales for 2017 are expected to exceed 20 million units, indicating at least a 5-fold increase compared to 2016.
With the rapid growth of Google Home’s market sales this year, industry insiders estimate sales of 5 million units; and with the preliminary development of the domestic smart speaker market in the second half of the year, sales are expected to reach 2 million units by year-end. Overall, the smart speaker market’s sales this year will reach 30 million units, representing at least a 5-fold growth compared to last year.
▲ Industry development cycle chart
Furthermore, from the cumulative sales growth curve of Amazon Echo, it is evident that its growth acceleration is continuously increasing, and it remains in a growth phase within the industry development cycle, indicating strong momentum. This also suggests that the global market will continue to accelerate its growth trend next year. You Renjie from MediaTek also stated that the smart speaker market in the U.S. has entered a period of popularization this year.
Domestic Sales Expected to Reach 5 Million Units Next Year
Although Alibaba achieved sales of 1 million units this year on Double Eleven through aggressive pricing, many in the industry remain cautious about the future trajectory of the smart speaker market due to the immature industry chain, low user awareness, and the lack of identified pain points.
However, You Renjie from MediaTek has given an optimistic forecast for next year’s smart speaker market sales—5 million units. Through communication with You Renjie, we learned that MediaTek holds about 70% of the main control chip market in the smart speaker sector, with clients including Amazon, Google, and Alibaba. He optimistically believes:
First, the overall international market for smart speakers is positive; when a product achieves sales of 20 to 30 million units globally, it proves that there is indeed demand;
Second, the domestic cloud technology is relatively mature, allowing smart speakers to understand and respond to spoken commands in a short time, which will promote the development of smart speakers;
Third, whether it is internet giants like BAT and JD.com or tech companies like iFlytek and Sobot, they are all building platform layouts and rapidly developing content services, which will soon meet the pain points of domestic users.
As a chip supplier at the core of smart speakers, if they are optimistic about this industry, they can indeed drive the development of the entire industry chain. Additionally, with players like JD.com, Alibaba, Xiaomi, and Baidu entering the smart speaker market, as well as Tencent’s subsequent involvement, various signs indicate that everyone is preparing to expand production capacity and capture market share. Achieving sales of 5 million units next year, following this year’s growth trend, is not impossible.
However, as You Renjie mentioned, the key is still to identify and meet the pain points of users regarding smart speakers, which will be crucial for unlocking the domestic smart speaker market.
Conclusion: A Crazy Feast and the Battle of Giants
Globally, the smart speaker market is indeed experiencing explosive growth. Just from Amazon Echo, it took nearly 3 years to achieve its first 10 million units sold, while the second 10 million units took less than half a year. Although aggressive discounts and global strategies played a significant role, the growth rate is also astonishing.
This year, the overall scale of the global smart speaker market is expected to reach 30 million units, achieving a leap in smart speaker development, considering that the overall market sales in January were less than 10 million units. However, behind this is a frenzy of promotions and a battle among giants.
Smart speakers are destined to be the “toys” of internet giants, who use speakers as an entry point to create backend voice interactions and build entire ecosystems. The ecosystem behind this means discounts and benefits for users, educating users to expand the market, and subsidies and support for backend ecosystem construction.
This also determines that the smart speaker market will ultimately be dominated by a few giants with massive resources, leaving many small and medium players to struggle for a share of the meager market.
