According to Ovum's Digital Consumer Insights 2018: Smart Living, playing music is one of the most frequently used AI assistants' features. To gain ground in the music business and stimulate usage among smart speaker customers, Amazon and Google have launched a free ad-supported music service in the US. The new free streaming service will be available for Amazon Echo and Google Home users, also including all compatible Alexa and Google Assistant-enabled devices. However, there will be certain limitations such as no on-demand features, meaning that the user will only have free access to an ad-supported selection of playlists and stations. To enjoy a more on-demand experience, free from ads, Amazon Echo users will need to subscribe to Amazon Prime orAmazon Music Unlimited and Google Home users to YouTube Music Premium. This initiative is not only pushing smart speaker owners to upgrade to paid subscription music services, but also opening the door to a more direct approach to advertising on smart speakers. Both companies have been extremely cautious with regard to voice ads as a way to not deteriorate the smart speaker user experience. Ovum believes this market strategy represents a soft landing into the advertising terrain, one that is currently limited to the music sphere. This will serve to test the waters and see how smart speaker users will react before any attempt is made to make voice ads more widely available.
Amazon continues to move into the healthcare business with the launch of HIPAA-compliant skills for Alexa. The "Health Insurance Portability and Accountability Act" is US legislation that provides data privacy and security for safeguarding medical information. Amazon's initiative will enable developers and healthcare companies to follow HIPAA guidelines in the development of Alexa skills, transmitting private patient information in a secure manner. Users at home will soon be able to ask Alexa to make a doctor's appointment and receive prescription delivery notifications, among other health-related queries and tasks. Alexa's functionality will certainly improve, but to encourage user engagement and win patient trust, Amazon will need to strengthen its communications strategy with regard to data privacy and security. Advocating transparency will be critical for Amazon to expand its reach in the smart care market. As a first step, Amazon will have to clearly explain how private information will be handled. Next, considering that AI is still an experimental science, Amazon should help users understand the current limitations of voice assistants and all the possible associated risks of using Alexa in a medical context.
Apple has permanently dropped the price of its smart speaker, HomePod, from $349 to $299. That's still significantly more than an Amazon Echo, but $100 less than the standard Google Home Max price (although interestingly the Home Max is now on sale for $299 in a number of major US retail stores). One issue for the Apple HomePod is that unlike Amazon and Google, who have a range of smart speaker devices at different price points, Apple only has the one speaker and it is priced (as one might expect from Apple) in the premium price bracket. In that bracket Apple does quite well, especially in its home market, but it's a small segment of the overall market. If Apple wishes to gain significantly more market share, it will ultimately have to launch a wider range of speakers. This leads to the rumor that one reason for the price drop may be the imminent launch of HomePod 2. If so, it will be interesting to see what new features the new speaker contains, because as well as price and form factor, Apple is also currently lagging behind both Amazon and Google in terms of functionality.
The Ikea-Sonos partnership is launching a new series of hybrid connected speakers: one integrated with a lamp and another that could be used as a bookshelf. The Symfonisk table lamp will cost $179 and the bookshelf speaker $99 – both are competitive prices for products that target the mass market. The new speakers will also integrate with other Sonos speakers, allowing a multiroom audio setup. In terms of control, customers will initially use Sonos' mobile app and eventually, in the future, Ikea's smart home app. The latter is expected to enable users to build scenes and integrate music controls with other Ikea smart home devices such as lights and blinds. Voice control is not yet available as there are no microphones built into the speakers. To offset this, both connected speakers will support Apple's AirPlay 2 for playing music, enabling customers to use voice commands via Siri. However, the lack of Alexa or Google Assistant built-in integration will be a key product limitation. Amazon and Google are not only leading the AI assistant race, but also offering users richer functionality and interoperability with third-party devices. Furnishing homes through sound and design is Sonos-Ikea's slogan for this market initiative, but to compete and survive in the smart speaker segment the support of a broader range of AI assistants will be a must.
SK Telecom is the latest company to launch a smart screen device, the NUGU Nemo. SK Telecom first launched its NUGU smart speaker range in 2016, although its voice interface was already available in SK Telecom's pay-TV service and other branded digital applications such as its highly successful mobile navigation app prior to the launch. To add value to the screen version of Nugu, SK Telecom has developed a range of video and learning content specifically aimed at children. To further differentiate from other types of screen in the home, the interactive content uses the hardware video recognition technology to provide certain safety features such as detecting if children are sitting too close to the screen.
To provide value from its smart speakers, SK Telecom is clearly integrating software and hardware capabilities around its own content assets. Initially this is a sound strategy, especially if a company has strong content and application assets, as it is easier to ensure a good level of customer experience. However, over time, vendors will need to be able to expand the device's AI capabilities to a wider range of applications to stop customer frustration and to appeal to as wide a range of customers as possible.
Smart Home Vendor Tracker: 2018, CES006-000057 (April 2019)
Smart Home Vendor Tracker: 2018 Highlights, CES006-000067 (April 2019)
Broadband Bundle Subscription Forecast Report: 2018–23, CES005-000032 (April 2019)
Ovum Digital Futures Presentation: Role of the Telco in Future Digital Services, CES006-000062 (April 2019)
"Smart home cybersecurity is now critical for greater IoT adoption," CES006-000072 (April 2019)
Mariana Zamoszczyk, Senior Analyst, Smart Home
Michael Philpott, Senior Practice Leader, Consumer Services