[Global Network Science and Technology Reporter, Wang Nan] The internet's excitement often passes us by if we're not paying attention.
As the marketing director of a speaker manufacturer in Shenzhen put it: "Big companies already have their own technological groundwork, so they can act swiftly when opportunities arise. We can only follow in their footsteps and move cautiously."
Amazon’s release of the smart speaker Echo three years ago ignited the market for smart speakers equipped with the integrated audio assistant Alexa.
In March 2015, just four months after Amazon Echo hit the market, JD.com unveiled its first speaker.
On April 25th, Tencent launched its “Intel Tencent Jingle,†an intelligent voice assistant supported by Amazon’s Alexa.
On April 28th, Baidu and Xiaoyu jointly introduced the new artificial intelligence video calling robot "Split Fish," featuring Baidu's conversational artificial intelligence system, DuerOS.
July 5th marked the unveiling of Baidu's AI Developer Conference, where the DuerOS open platform was officially launched.
On the same day, Alibaba’s Artificial Intelligence Lab also released the AliGenie platform and its independently developed smart speaker, Tmall Genie X1, powered by a Chinese speech understanding engine.
At this point, the BATJ (Baidu, Alibaba, Tencent, and JD.com) camps had all entered the smart speaker arena.
The official rise of the domestic smart speaker market began in the second half of 2016, spurred by the sharp increase in Amazon Echo sales.
According to Slice Intelligence's online statistics, since October 2015, Echo’s sales experienced a boom and peaked in November of the same year.
Of course, the form of the speaker itself isn't the critical factor. What drew many players, especially major ones, was Amazon's pioneering work in intelligent voice systems. In the past six months, 7,000 companies have exhibited at the CES booth in the U.S., and almost all Alexa’s skills exceed 15,000. The success of these precedents shows the vast potential of the platform behind smart speakers.
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The rush of giants into the market and the flocking of small and medium-sized enterprises once raised hopes that the smart speaker market might become a popular trendsetter.
Soon, however, it became clear that this battle would hinge on a crucial factor.
"There are 112 companies within one kilometer of Shenzhen Nanshan District focused on voice intelligence," General Manager Li Haibo of Himalaya FM Hardware Division recently noted. "They don’t know where the market is or who the users are, but they know the trend is coming, so they feel compelled to keep up."
As soon as the buzz started, orders poured in. However, once the market cooled, the overcapacity and early-stage investments in pipeline resources could only be absorbed by the supply chain.
"Back then, there was no mature intelligent technology solution available on the market, and voice interaction technology wasn’t as popular as it is today. A smart speaker was considered well-equipped if it could respond to dialogues and be controlled via Bluetooth or Wi-Fi," said Xiao Zhang, a staff member of a smart speaker manufacturing company in Shenzhen. "Although it was a distant comparison to Echo, at the time, having a fast and reliable connection was crucial."
Soon, the company organized and produced tens of thousands of such smart speakers, quickly launching them into the market. Initially, they attracted some buyers. However, within a short period, sales plummeted in the following months. In the first month, they could sell over a thousand units, then only hundreds, and eventually, they couldn’t sell any more. To date, the company has thousands of unsold products sitting in warehouses.
In Shenzhen, many companies that originally produced tablets or mobile phones switched to smart speakers. These companies managed to sell only a few hundred units per month and closed shop after a few months.
At the end of the supply chain, foundries were scrambling for a meager market share, even operating at a loss.
So, what exactly can a smart speaker do? By using voice commands, you can turn on lights, adjust air conditioning temperatures, change TV volumes, control curtains, play movies, and even find the nearest cinema, book tickets, and call a ride—all without touching your phone. The smart speaker can handle all these tasks for you.
However, our reporter discovered that searching for "smart speaker" on Taobao reveals a wide range of related products. These smart speaker products vary greatly in quality and price, ranging from a few yuan to tens of thousands. Without a certain level of professional knowledge, consumers can barely distinguish between truly smart and ordinary speakers.
Many speakers simply flaunt cool lighting and exotic designs, pretending to be cutting-edge technology. Yet, in terms of functionality, they fail to utilize intelligence. Their capabilities are quite basic, merely playing music from a mobile phone—far from the capabilities of Echo.
"The technology for understanding and responding to conversational Chinese is still immature," said Gartner analyst Tracy Tsai. She pointed out that smart speaker devices in the Chinese market still suffer from defects in speech recognition, which is the key reason why the Chinese market struggles to embrace smart speakers.
Bloomberg reported in its July 16th report that China’s market for AI-powered audio equipment remains in its infancy. Market research firm Counterpoint Research estimates that 2 million smart speakers will enter the Chinese market this year, still lagging behind the U.S.'s 14 million.
The CEO of Horizon Robotics and founder of Baidu's Deep Learning Institute highlighted another reason why smart speakers haven’t taken off in China's largest retail market. Many people, especially young professionals, rarely have time to listen to smart speakers at home.
Echo in the U.S. is commonly used in scenarios like bedside information sources and kitchen controls, but in China, these scenarios don’t align with local conditions. Additionally, connected smart home devices aren’t yet diverse enough to create a seamless user experience.
Industry sources suggest that the wave following Echo’s release or the introduction of HomePod isn’t a true consumer boom, as the scenes haven’t been refined. While some tech enthusiasts might adopt these smart speakers, the sales figures remain far below those overseas.
Technology failing to meet expectations and lack of consumer interest have both contributed to the lukewarm reception of smart speaker products in the domestic market.
Based on monthly sales data from Taobao (including Tmall) e-commerce platform statistics, a total of 17,645 units were used to calculate the market share of each brand. Xiaomi accounted for 26% of internet sales, with the top three brands collectively holding more than half the market. The remaining brands had low market participation. Overall, the outlook for smart speakers in the domestic market isn’t promising. At least, the stock market with monthly sales of less than 20,000 units and annual sales of no more than 1 million units makes it hard to justify the large-scale investments mentioned earlier.
Liu De, co-founder of Xiaomi, believes that smart speakers are merely a supplement to mobile phone functions.
"This is complementary; smart speakers can never replace the centrality of the phone, so it’s not a substitution. Smart speakers are a very interesting new concept, serving to complement the phone’s functions. In the U.S., many families need music and have different living conditions than in China. The demand for music among Chinese users isn’t as strong as in the U.S., so there’s a slight difference in market demand. This creates uncertainty, and we need to experiment."
"Success or failure depends on resources," Liu De emphasized. Smart speakers and other hardware products differ in requirements, such as the need for a robust music library (with copyright-protected music). This is a test of each company’s strength. "How do you integrate more authentic music? There are only a limited number of platforms in China that can provide genuine music, so integrating resources is a crucial ability."
For the future of smart speakers, industry insiders stated that having voice interaction capability is the first step for speakers to become smart. The next step is to use voice interaction to fulfill various usage scenarios in consumer life. Smart speakers offer more features.
While no one can predict how far smart speakers will evolve, they may be the best representation of speech interaction. In the development of voice interaction, smart speakers may not be the only terminal, but they will undoubtedly play an essential role. They cannot replace smart machines, but their development should complement the growth of voice interaction and artificial intelligence.
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