Reportedly, Tencent Holdings (TCEHY - Free Report) is planning to launch voice activated digital assistant service within its messaging platform, WeChat. Per Bloomberg, the service called Xiaowei will have features similar to Apple’s (AAPL - Free Report) Siri.
Notably, Tencent launched Xiaowei intelligent service in May 2017. Apart from voice, facial and image recognition, the service also offers a software development kit (SDK) for hardware developers.
WeChat Voice Assistant to Provide Competitive Edge
Tencent’s latest move is expected to provide it a competitive edge over the likes of Baidu (BIDU - Free Report) , Alibaba (BABA - Free Report) , Huawei and several other smaller companies offering voice assistants in China.
The company’s extensive ecosystem, driven by its stake in ride-hailing, food delivery, education, and search engine companies, is the key catalyst in this regard.
The integration of artificial intelligence (AI) powered voice assistant within WeChat is likely to drive the social platform’s user base that currently exceeds more than 1 billion. Xiaowei will not only help WeChat users listen to music from Tencent’s own QQ Music service, but also order food or call cab for a ride due to links with third-party apps like Meituan Dianping and Didi Chuxing.
The voice assistant will improve the company’s position in the smart home market in China. Per Tencent, “Xiaowei can also interact with various smart devices to control the adjustment of lighting, air conditioning and TV.” Hence, WeChat users will now be able to control connected devices at home by using the voice assistant.
Competition for Smart Home Dominance Heats Up In China
Competition for dominating the smart home market is heating up in China. Notably, companies like JD.com (JD - Free Report) , Baidu, Alibaba and Huawei are well ahead of Tencent in releasing solutions catering to this market. Other notable companies offering their smart home products include Lenovo, Mobvoi and Xiaomi in China.
JD.com launched its DingDong device way back in 2015. Apart from offering usual services, the device lets users order goods from the ecommerce giant’s platform and track delivery status.
Alibaba’s Tmall Genie, launched in July 2017, also help users buy products on its ecommerce platform through their voice and pay using Alipay. Reportedly, this Zacks Rank #3 (Hold) company has sold more than 1 million units since release. Per Bloomberg, Alibaba is also integrating its digital assistant into Mercedes-Benzes, Audis and Volvos in China.
Baidu offers Xiaoyu powered by DuerOS, the company’s voice-recognition software. Per Quartz, the device developed in partnership with Ainemo is equipped with a screen and camera that allows visual interface and video chat. The company also has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, Huawei offers Xiaoyi that supports its AI Cube smart speaker and can also be found in its smartphones. Notably, Xiaoyi is only available in China.
Despite its sprawling ecosystem, we believe Tencent will find it difficult to gain market share due to its late entrance. However, the company’s efforts to diversify business will definitely lower exposure to core gaming that has been negatively impacted by stringent regulation in China. Tencent currently has a Zacks Rank #5 (Strong Sell).
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