During I/O 2019, Google laid out the next phase of its smart home strategy, announcing important changes to its branding and a renewed focus on Google Assistant as the key platform and development engine that will enable the company to create a more unified smart home proposition. Google's revamped strategy is bringing Google Assistant closer to other major smart home ecosystems such as Amazon's Alexa. However, going all-in with the new Works with Google Assistant program risks causing disruption for consumers. The shutdown of Works with Nest forces Nest partners to either embrace Google Assistant as the new platform or end their integration with Nest's products. This means that customers may not be able to enjoy the same level of product functionality and interoperability straight away because they will have to wait for the ecosystem to adapt to the new rules. The key for market participants is to tell a more coherent smart home story, not wear away customer trust or disrupt the smart living experience while trying to make progress.
Amazon announced during the Microsoft Build developer conference in May that Alexa has become accessible hands free on all Windows 10 PCs. The Alexa app was first introduced on Windows 10 in November 2018. The app needs to be working in the background for Alexa to be invoked. This is a significant development for Amazon, extending the reach of Alexa beyond just some home devices. According to a May 2019 Ovum survey conducted in China, France, Germany, Spain, the UK, and the US, PCs are the second most popular devices for AI assistant usage after smartphones, with 26% of respondents using PCs to interact with AI assistants daily (putting PCs ahead of tablets and smart speakers for AI assistant usage). Microsoft and Amazon announced a partnership for cross-platform integration between Cortana and Alexa back in 2017. The continued collaboration between both companies has been highly beneficial for Amazon, allowing it to better compete against Google. Google Assistant has yet to become available on Windows 10.
The new 5.5-inch-screen smart display is a smaller and cheaper version of the Echo Show. But the main difference compared with the original version is how Amazon is addressing the privacy topic. First, Amazon has designed a physical camera shutter for the smart display which enables users to cover the lens and stop video recordings. Second, Amazon has simplified part of the Alexa privacy settings for all Echo devices by allowing users to delete recordings through voice commands. Third, the company has rolled out a new microsite with clearer explanations on privacy settings. These changes are a clear indication that Amazon wants to improve the way it deals with the growing concerns around privacy. Giving users greater control over what happens to their recordings is an important step to overcome current concerns. However, navigating Amazon's settings is a challenge for some users, and enabling the new privacy features in the Alexa app or Amazon's website might not be straightforward. Amazon needs to streamline this process too if it wants to give users more control of their privacy.
At WWDC 2019 Apple announced HomeKit Secure Video. Using this feature, users can store video captured by HomeKit-compliant home security cameras in their iCloud account instead of having to rely on the proprietary, standalone cloud storage supplied by the camera vendor. Storage of the videos will not be counted against the user's iCloud storage limit, but they will have to upgrade to a 200GB account (£2.49 [$3.13] per month) to use a single camera and a 2TB account (£6.99 per month) for multiple cameras. However, this move is about more than just user convenience. The hacking of home security cameras is becoming a big issue for consumers, and after the cost of devices it is the second biggest barrier to purchase for home-owners. Apple's HomeKit Secure Video solves this by encrypting the video locally before it is sent into the cloud, where not even Apple can access it. It is therefore a convenient solution that users can trust (if they have HomeKit-compatible devices). At launch, only cameras from Logitech, Eufy, and Netatmo and routers from Eero and Linksys support HomeKit Secure Video. As with all HomeKit use cases, Apple will need to rapidly expand the list of compatible devices if it hopes to gain any sort of scale.
Bose and Sonos's first incursion into the AI assistant world was via Amazon's Alexa. Now, both companies are bringing Google Assistant to some of their most popular smart speakers and soundbars. By supporting both Alexa and Google Assistant, Bose and Sonos have increased their appeal and competitive edge over other device-makers which have so far only supported one single voice assistant, such as JBL Link with Google Assistant or UE Megablast with Alexa. Ovum believes that Bose and Sonos's ability to support both platforms represents a major step in the race for the smart home and a threat to Amazon and Google-branded smart speakers. From a user perspective, this market initiative gives consumers greater flexibility to choose which voice assistant they want to use, especially in households that have advocates of both voice assistants. It is important to notice that customers will only be able to use one AI assistant at a time per device. This means that Google Assistant and Alexa won't run simultaneously. Therefore, users will have to choose one assistant as their preferred one, although they will be able to switch to the other assistant in the settings menu of Bose and Sonos mobile apps at any time. The challenge will be to enhance the user experience by supporting both assistants simultaneously, with no need to restrict users to a single-assistant experience. The first company to achieve this and overcome current commercial restrictions from Amazon and Google that impede the simultaneous invocation of assistants in the same device will be in a better market position.
Yandex, a Russian technology company specializing in AI products and services, has launched a smart home ecosystem developed around its own AI assistant, Alice. Alice has been available in the Russian market on smartphones since October 2017 and has tens of millions of monthly active users. It has competition from Google and Apple's Siri. Amazon, Microsoft, and Samsung have yet to launch Russian versions; therefore, at least for now, Yandex is more protected from global competition than perhaps other national companies. In May 2018, Yandex launched an Alice smart speaker, the first specifically designed for the Russian market. This has now been followed up by a fully-fledged smart home platform, including devices from household brands such as Philips, Xiaomi, and Samsung. Yandex's success is an example of how being local can sometimes create an advantage over global competition, at least in the short to medium term. The challenge will be keeping this advantage long term, as those global players start to match scale with more localized capabilities in more and more territories
AI Assistant Tracker: 2H18, CES006-000073 (May 2019)
AI Assistant Forecast: 2019–24, CES004-000085 (May 2019)
Consumer AI Device Forecast: 2018–22, CES004-000077 (May 2019)
Google I/O 2019: Key Consumer and Entertainment Trends, CES003-000508 (May 2019)
Smart Home Cybersecurity Case Study: Using SAM Seamless Networks to protect broadband customers from attacks, CES006-000074 (May 2019)
Mariana Zamoszczyk, Senior Analyst, Smart Living
Ronan de Renesse, Practice Leader, Consumer Technology
Michael Philpott, Senior Practice Leader, Consumer Services