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Tuesday Technicalerts: The Future Effect of Google And Amazon Smart Home Devices

bfm_blog_12.05.2017

Anyone who keeps up with the latest developments in technology will likely be familiar with the struggle for dominance in the smart home device space. Amazon’s Echo device, which came to the market first, has managed to secure a dominant market share (roughly 70%), but Google is making strides in competition with its Google Home device. Apple is also planning to disrupt the market through its launch of the HomePod, expected to release early 2018.

Each device has offerings which play to what the respective company is best known for -- the ability to place Amazon Prime orders through the Echo, Google search and account tie-ins through Google Home, and an (alleged) exceptional home audio experience through Apple HomePod. That being said, they all do share some common traits like the ability to control other connected devices such as lights and TVs, the ability to play music and answer questions on demand, and they are all designed to reduce the user’s need to interact directly with screens.

Although Smart Home Devices are still considered as frivolous novelties by some, it’s proven that overall adoption of the products is increasing. Data published by eMarketer estimates that connected household device penetration will be 13.8% of the US population in 2018 -- up considerably from an estimated 4.8% and 10.9% in 2016 and 2017, respectively. eMarketer estimates that roughly 24.5 million connected speakers will ship in 2017.

Smart Home Devices will Become Ubiquitous

Although it’s only been a few years since the introduction of smart home devices, the available options have increased greatly. Recently, Amazon introduced the Echo Dot and Google developed the Google Home Mini, providing customers with multiple options when considering the purchase. Both of these smaller scale devices are marked at roughly $50 which provides an affordable option for consumers.

The introduction of these low-cost devices is notable because price is still one of the most significant barriers to adoption. Currently, consumers don’t consider a smart home device to be something they need in the same way they feel they need a mobile phone, TV, or computer, for example. That being said, consumers didn’t always think they needed smartphones either when the iPhone first launched, but now it’s nearly impossible for many to imagine living without one. Google and Amazon are making the assumption that if they can get their devices into consumers’ homes, they’ll soon find them necessary.

However, until consumers feel they’re really missing out on something by not owning one of these devices, they’re unlikely to shell out $100 - $300 for the more premium versions. The Echo Dot and Google Home Mini, are therefore essential entry points for many consumers, introducing them to the technology at relatively low risk and encouraging deeper overall adoption. In the lead-up to the all-important holiday season, both Amazon and Google have discounted their devices even further, meaning consumers can get their hands on one for under $30 in many cases.

Security is also another often-cited barrier to smart home device adoption. Despite assurances that the devices only listen when using their respective “wake words” (ie; “Alexa” or “OK, Google”), consumers are still uncertain whether they’re comfortable introducing technology that has the ability to listen and, at least theoretically, record everything they say, into their home environments.  This concern is likely to be a temporary one though, as security standards will improve over time. Younger generations, specifically those under 44, have a much higher adoption rate for smart home devices which indicates a higher level of comfort with the technology. As more accessible price points speed adoption, security concerns will likely become secondary to the convenience offered by these devices.

Voice Is The Next Frontier

The current smart home devices on the market are just the brink of smart devices that will soon be introduced to the public. The current capabilities of these devices by no means represent the limit of what voice platforms can do, natural language processing is improving, and the AI that powers digital assistants will also become smarter and better at predicting user behavior in the coming years. Consumer comfort with voice interfaces is quickly becoming the norm. Already 20% of Google searches on mobile are done via voice search. Of smart home device owners, 16% report using their device multiple times per day, 26% report daily use, and 39% use it at least multiple times per week (eMarketer).

Connected speakers are just one piece of the puzzle, and it’s the one that will do the most in terms of introducing and acclimatizing users to voice-activated technology. The larger picture is all about the smart home, and the connected speakers are necessary for development because voice is what will make smart homes truly intelligent. The smart home would only be convenient if it can be controlled through voice commands; otherwise, it’s simply a home full of tech devices that you still need a screen to interact with. Voice interfaces allow users to interact with the internet no matter what else they happen to be doing at the moment.

Voice interfaces will likely also have far-reaching effects on commerce. If Amazon wins the connected speaker race, it will be even further cemented as the leading digital marketplace. Voice commerce has already proved effective for reordering products and for those products which have a limited number of choices available. Voice-activated devices with screens, like the Echo Show, will likely make voice commerce even more viable, as the device is able to show the user options for products where visual assessment is important.

Takeaways

Amazon, Google, and Apple are making serious efforts to bring connected speakers to the masses. Low-cost options signal the desire to get these devices into the homes of consumers in order to hasten adoption. As adoption ramps up, voice interfaces will become more ubiquitous, shaping the way we interact with the devices in our homes and changing the way we shop for products online.

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  1. HI, nice blog about The Future Effect of Google And Amazon Smart Home Devices. I like it

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