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Smart Speaker Race Intensifies: AMZN, GOOGL & Others to Watch

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The smart speaker markethas is an attractive space due to strong consumer spending.

These speakers have been gaining traction due to a wide variety of robust features, which make them vastly superior to traditional speakers. Markedly, the ability to connect to multiple devices as well as integration of voice-assistant features makes them highly attractive for potential customers.

Moreover, advancement in Bluetooth and Wi-Fi technologies will lead to a significant improvement in connectivity which will allow speaker manufacturers to further innovate their services. This bodes well for the market’s long-term growth prospects.

Further, the surge in stay-at-home trends due to coronavirus induced lockdowns is driving demand for online streaming and education services, which in turn is expected boost momentum for wireless speakers in the near term.

This is why major tech players like Amazon (AMZN - Free Report) , Alphabet’s (GOOGL - Free Report) Google division, Alibaba (BABA - Free Report) , Baidu and Apple (AAPL - Free Report) as well as independent players like Sonos and Xiaomi are leaving no stone unturned to gain an edge in this highly lucrative space.

Per Mordor Intelligence data, the wireless speaker market is expected to be worth $12.1 billion by 2025, witnessing a CAGR of 14.6% between 2020 and 2025.

Intensifying Competition

The race to dominate the wireless speaker market has become intense, with major players trying to grab market share through constant innovation, enhancements and new product roll outs.

Per a report by Strategy Analytics, smart speaker sales in first-quarter 2020 hit 28.2 million, up 8.2% year over year. Amazon, which currently has a Zacks Rank #3 (Hold), maintained its #1 position, trailed by Google. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, Amazon’s market share increased to 23.5%, up from 21.5% in the year-ago quarter. Meanwhile, Google’s market share increased to 19.3% from 17.9% in the year-ago quarter.

Amazon has been able to sustain its dominace thanks growing adoption. Notably, its third-generation echo dot device comes with Alexa voice assistant support as well as the ability to access streaming services like Spotify and Amazon Music. Also, the low price point of the device is likely to drive its adoption among customers looking for budget speakers.

Meanwhile, Apple’s HomePod 2 wireless speaker is expected to launch in 2020. The HomePod features superior sound quality compared with its rivals and comes with Siri voice assistant. However, customers will need to invest in Apple’s ecosystem to get the full benefit of the device. Apple currently has a Zacks Rank #3.

Moreover, Chinese vendors aren’t far behind in the speaker race either. Alibaba, another Zacks Rank #3 stock recently announced its decision to invest 10 billion Yuan (US$1.4 billion) this year to strengthen the AI and Internet of Things (IoT) ecosystem around its smart speaker Tmall Genie.

In fact, the wireless speaker war has escalated to such a degree that companies have resorted to suing each other to get the upper hand in the market. Recently, Google filed a lawsuit against home speaker maker Sonos alleging patent infringement. The lawsuit comes five months after Sonos had filed a similar lawsuit against Google.

Year-To-Date Performance

Google Emerging as Leading Challenger to Amazon

Google is well positioned to be the main contender challenging Amazon’s dominance in the market. The company’s robust AI and IoT capabilities make it a force to be reckoned with in the wireless speaker space. Notably, Google-parent Alphabet has a Zacks Rank #3.

Moreover, Google’s has stepped up its promotion activity through mass giveaways of its speakers in partnership brands such YouTube and Spotify. The company has also organized giveaways at major events like CES 2020 and NBA games. Thus, the company’s efforts are likely to aid it in increasing installed base for its wireless speakers.

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