Amazon has been exploring ways to enable effortless shopping through Alexa since its inception. But, by launching "shopping actions," Google is trying once again to play catch-up and match Alexa's hands-free, voice-driven shopping experience. To increase reach, Google is going to market with a unified shopping program across multiple platforms and devices – not only Google Assistant, but also Search and Express, a shopping service available in some parts of the US. This initiative will help Google's partners in the retail space which are struggling to compete with Amazon. It will enable retailers to revamp the shopping experience through voice commands, enhancing their relationship with customers and igniting ongoing promotions. Most importantly, the announcement highlights Google's intentions to challenge Amazon's core e-commerce business. Ovum believes Google is the only contender in Western markets capable of having a chance to succeed due to its network size, resources, and ability to scale.
The smart thermostat vendor Ecobee has received $61m in investments from Energy Impact Partners, Thomvest, Relay Ventures, and Amazon's Alexa Fund. Over the past few years, Ecobee has been an agnostic advocate of AI integration as a way to enhance the smart living experience at home, promoting integration with popular virtual assistants such as Alexa, Siri, and Google Assistant. However, after receiving direct support from Amazon through the Alexa Fund in 2016, Ecobee launched the following year a new smart thermostat with built-in Alexa voice service capabilities, making it clear what its preferences for AI integration were. By making a bet on Ecobee, Amazon has shown its determination to threaten Google Nest's supremacy in the energy management space. Amazon's recent acquisition of Blink and Ring in the home monitoring segment illustrates a similar market approach to build a product portfolio capable of competing against Google. Ovum expects Amazon will continue building its smart home proposition around energy, expanding into smart lighting and smart plugs, directly or indirectly, as in the case of Ecobee.
According to Bloomberg, Apple has lowered its sales forecast for its AI home assistant speaker, HomePod, and cut orders with Inventec, one of its manufacturers. As outlined in Ovum's initial view of the HomePod, Apple put a lot of emphasis on the sound quality of the HomePod speaker, but kept its ecosystem small, thus limiting its capabilities. For music, this included only directly enabling Apple Music and a select number of global radio stations. This was enough for hardcore Apple fans and early sales were promising. However, reported sales have tailed off since then, as less-dedicated consumers failed to be enticed by a $349 speaker with such limitations. If Apple wishes to succeed with HomePod, it would be better off opening up the ecosystem and trying to show customers that they receive the best experience through using the Apple apps, rather than simply trying to control them.
A subsidiary of iPhone supplier Foxconn has announced plans to acquire Belkin for $866m in cash. Belkin is a California-based company in charge of popular brands such as Linksys, known for its home routers, and WeMo, known for its smart home devices. This acquisition will allow Foxconn, an important manufacturing partner to Apple for many years, to emerge from behind the scenes to make a direct incursion into the consumer sphere and diversify its product portfolio. Ovum believes Foxconn has a unique chance to make inroads into the smart home with well-known brands. However, it will require more than hardware manufacturing capacity to play against companies such as Amazon and Google. Building a rich partnership ecosystem, promoting voice integration with AI assistants, and most importantly paying attention to the main lessons learnt among other market participants will be key to growth in the smart home space.
SK Telecom was the first telco to launch a dedicated AI Speaker in 2016, which it called Nugu. Since then the company has launched Nugu Mini (think Echo Dot merged with Echo Tap) and a Nugu TV STB. It has also integrated Nugu into the company's T Map navigation platform, for which it has over 10 million active users (approximately 70% of South Korea's mobile navigation market). It is also set to launch a new AI-powered music-streaming platform. Such investment has led to significant success and in February the company announced 3 million active Nugu users, an increase from 2.1 million in December 2017 and only 110,000 in August 2017. The company predicts it will hit 5 million active users by the end of 1H18. All telcos talk about the importance of remaining relevant to their consumer base in this world of global OTT players, but Nugu SK Telecom seems to be having success.
Smart Home Devices and Services Forecast: 2017–22, CES004-000024 (April 2018)
MWC 2018: Key Consumer and Entertainment Trends, CES003-000136 (March 2018)
Consumer Broadband Subscription and Revenue Forecast: 2017–22, CES005-000008 (March 2018)
TV Devices Forecast: Media Streamer Sales and Installed Base, 2017–22,CES004-000023 (March 2018)
"House of screens: Yet another way Netflix is shaking up TV's status quo," CES003-000154 (April 2018)
"Deutsche Telekom continues to expand its Qivicon smart home platform," CES006-000016 (March 2018)
"Where does AI fit best – or worst – in customer engagement?" INT001-000036 (March 2018)
Mariana Zamoszczyk, Senior Analyst, Smart Home
Michael Philpott, Senior Practice Leader, Consumer Services