The data-driven nature of the world we inhabit has made smart speakers integrated with voice assistant inevitable. In fact, courtesy of improving AI skills of the virtual assistants, smart speaker demand is increasing not only in developed regions but also emerging markets among which Asia-Pacific (APAC) is the most promising.
Per a report from Inkwood Research, the APAC smart speaker market is expected to witness a CAGR of 26.1% between 2019 and 2027. With the emergence of 5G networks in APAC, smart speaker providers like Alphabet’s GOOGL Google, Amazon AMZN, Baidu BIDU, Apple ( AAPL Quick Quote AAPL - Free Report) , Alibaba BABA and Xiaomi are likely to witness growth in the adoption rate of their respective devices. Additionally, APAC smart speaker space is witnessing significant growth on the back of increasing online shopper penetration as these devices are capable of placing an order online with just voice command. Does APAC Countries Hold Promise? User penetration of smart speakers in countries like Australia, Japan, South Korea, China and India, which form a significant part of APAC, is increasing rapidly. According to an IHS Markit report based on late 2018 data, smart speaker market penetration in India was the highest at 20.9%, leaving behind the United States with a penetration rate of 20.7%. In fact, Australia came in seventh with a penetration rate of 10.7%. Additionally, a report from Statista shows that approximately 3.7 million households in Japan had adopted smart speakers in 2018. The figure is expected to hit 22 million households by 2024 in Japan. Further, a Canalys report indicates that East Asian countries like China, Japan and South Korea are expected to witness rapid growth in the smart speaker adoption rate this year. Installed user base in these nations are likely to exhibit growth of 166%, 131% and 132%, respectively. Year-to-Date Price Performance What are Baidu, Alibaba & Xiaomi Doing in China? Smart speaker market of China is experiencing a boom on the back of constant technical advancement in the country. A Strategy Analytics report shows that there are currently 35 million households utilizing smart speakers. Further, 63% of non-owners are planning to buy smart speaker by the next year. Given this upbeat scenario, Baidu, Alibaba and Xiaomi are constantly making efforts to advance their smart speakers namely Xiaodu, Tmall Genie and Xiaomi Mi AI, which are contributing to the smart speaker shipment growth in China. According to Canalys report, these companies have accounted for 13.1%, 13.6% and 12% of the worldwide smart speaker shipment in third-quarter 2019, respectively, thereby securing their spots in the top five. Notably, Alibaba has recently teamed up with Starbucks. Chinese customers can now order Starbucks beverages and food via Tmall Genie. Deliveries will arrive at customer’s doorstep within 30 minutes. Further, the company’s Tmall Genie Auto smart speakers will reportedly be integrated into local vehicles from Audi, Renault and Honda Motor. All these endeavors are likely to strengthen this Zacks Rank #3 (Hold) company’s footprint in the China’s smart speaker space. Meanwhile, Baidu’s robust AI platform, DuerOS, is likely to continue aiding the adoption rate of smart speakers. Notably, Baidu sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Where Does Amazon, Google and Apple Stand? Although Amazon, Google and Apple do not have much exposure to the Chinese smart speaker market, their presence in rest of APAC countries especially in Australia and India is worth noting. Amazon’s Echo speakers, Google’s Home and Nest speakers and Apple’s HomePod are gaining traction on the back of innovating AI skills in their virtual assistants. Further, a wide range of offerings by Amazon and Google remain major positives. In Australia, a Kantar survey report suggests that 13% of the households are using smart speakers out of which Google has the largest share of 70%. Amazon and Apple hold 17% and 6%, respectively. These three companies are also leaving no stone unturned to bolster presence in India where ongoing digitization efforts are leading to rise in demand for smart speakers. Amazon, which carries a Zacks Rank #3, recently launched Echo Input Portable Smart Speaker Edition in India, thus expanding its offerings in the country. Further, Google launched Google Nest Mini smart speaker, a successor of Google Home Mini, in the country. Notably, the device is capable of operating efficiently in noisy environments. Google’s parent Alphabet carries a Zacks Rank #3. Meanwhile, Apple carrying Zacks Rank #3 is also gaining steam in the smart speaker space of India with HomePod, which delivers unmatched music experience owing to superior music quality along with providing all other smart speaker features. Looking for Stocks with Skyrocketing Upside? Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>