What are the global adoption rates / recent growth of voice assistants such as Amazon Echo/Alexa and Google Home, etc?
Voice assistants, also referred to as virtual assistants and voice-enabled speakers, have dramatically increased in popularity and use across the globe in recent years. The virtual personal assistant speaker market generated a revenue of $720 million in 2016 and is expected to reach a maximum potential market size of $13 billion by 2024. As consumers begin to feel more comfortable with this relatively new technology, adoption rate growth of more than 50% CAGR have been cited across 19 countries worldwide. Trends within the market include the evolution of IoT technologies, product inclusions and features that add to a consumer's daily life and the rate of growth of embedded voice-assistant devices such as hubs and lighting systems and its impact on standalone voice assistants. Below we provide a deep dive into our findings with a specific focus on market size and growth, key players to complement market growth and product dominance and development, adoption rates and trends within the voice assistant market.
Through our research, we found a number of differing terms relating to voice assistant technology. Physical devices refer to either standalone voice-enabled devices or devices in which voice-assisted technology is embedded. For the purpose of this research, we have focused on standalone devices as they reflect most closely to the devices mentioned in the research brief. Furthermore, standalone devices incorporating this technology are referred to in a number of ways, including voice-enabled speakers or devices, virtual assistants, voice assistant devices, smart speakers, AI-enabled devices or speakers and voice-command devices. Alternatively, virtual assistants or digital assistants appear to refer to the internal software used within voice-activated devices and includes programs such as Amazon's Alexa, Google Now, Apple's Siri and Microsoft's Cortana. For the purpose of this research, we have focused on both standalone devices and software, as the research brief makes mention of devices such as Amazon's Alexa/Echo and Google Home and the impact that chatbots will have in the future (a chatbot being internal software, that may be voice-activated).
Furthermore, while we have endeavored to provide as much data as possible pertaining to voice assistants worldwide, the most prevalent information pertains to the most dominant US market. Following exhaustive research, we have confirmed that market share statistics are not available by region as requested. Therefore, we have included as much global data as is publicly available, relating to the countries outlined in the spreadsheet provided, and have used US data to support and provide further information on our findings.
Market Size & Growth
The virtual personal assistant speaker market recorded a total revenue of $720 million in 2016. In Q3 2017, 7.4 million smart speaker units were shipped globally and a jump in sales was seen in the second half of 2017, with an estimated 35 million smart speakers installed worldwide, prior to Christmas sales. The Q3 2017 sales figures indicate 708% year-on-year growth in smart speaker sales within the previous 12-month period.
According to Gartner, this market is expected to generate $3.52 billion by 2021. This prediction is based on the approximate sale of between 10 and 12 million units in 2017 though exact figures are not made publicly available by industry leaders Amazon and Google. Additionally, Business Wire predicts that the global smart voice-enabled assistant speaker market will generate upwards of $4 billion and experience a CAGR of more than 30% between 2016 and 2022. More generous estimates, such as the one reported by Global Market Insights, predict a global revenue of $13 billion by 2024, generated from the sale of smart speakers.
According to global Q3 2017 data, North America held a vast majority of the smart speaker market with 75%, while growth in the Asia-Pacific and Western Europe regions was expected in Q4 2017. China also experienced growth in the smart speaker market, particularly from new product launches from companies Alibaba and Xiaomi. On a global scale annually, China does not even come close to the US in terms of popularity and sale of smart speaker devices, shipping approximately 2 million units per year, compared to approximately 35 million units in the US. This is most likely due to Chinese consumers' reliance on mobile devices and the little time spent relaxing at home, where devices such as smart speakers would most often be used. This being said, Chinese retailers are still hoping for future sales, with the expectation of 22 million smart speaker units to be sold in China in 2022 and major eCommerce players such as Alibaba, are expected to have more penetration and impact on the global market it the years to come.
Amazon and Google hold the majority of the global virtual assistant speaker market, outside of China. With regard to global smart speaker units shipped in Q3 2017, Amazon accounted for 5 million units (66.9% of the market), Google shipped 1.9 million units (25.3%), JD.com, Xiaomi and Alibaba (all in China) recorded the shipment of approximately 100,000 units each (1.6%, 1.3%, and 0.9%, respectively) while other companies accounted for just 300,000 units (3.9%). Amazon's Alexa operating system held a 69% share of the market in Q3 2017, a decrease from the 80% share recorded in the first 6 months of 2017. This change is most likely a result of Google's gains and the launch of Google Home within more markets globally.
In the US in 2017, Amazon Echo holds the majority share of the voice-enabled speaker market by a long way, accounting for 70.6% of sales. The next closest competitor in this market is Google Home with 23.8% and other companies making up the remaining 5.6%. Future predictions indicate that while Google's share of this market will increase, Amazon will still hold a vast majority for the foreseeable future.
Amazon's Echo's global reach has been relatively small prior to December 2017 and was only available in the US, Germany, the UK, Canada, Austria, Japan and India. The product is now available in over 80 markets globally, including in Europe, Latin America and Africa such as Belgium, Finland, the Netherlands, Portugal, Poland, Uruguay and Sweden.
As consumers around the world begin to feel more comfortable using voice assistant technology, engagement and adoption rates have also risen. According to Accenture, adoption rate growth of more than 50% year-on-year growth have been cited across the 19 countries surveyed. Data also indicates that one-third of online consumers in India, China, the US, Mexico and Brazil will own a digital voice assistant by the close of 2018.
In the US in 2017, almost 20% of the population or 27.5% of smartphone users used a virtual assistant at least once over the period of one month. Furthermore, in 2017, 29.9 million digital assistant users (making up 26.3% of users overall) were millennials, with this figure expected to rise to 35.8 million in 2018 and 39.3 million in 2019.
One factor identified that seems to be affecting adoption rates of voice assistants is consumer's privacy concerns. Gartner identified that the user perception surrounding voice-enabled, listening devices is still a relatively new concept to consumers and while manufacturers aim to educate and improve capabilities surrounding privacy, it is noted as an ongoing battle with regard to adoption.
New devices entering the market
The development of new products within the voice assistant market will have a profound influence on key players and sales in the coming years. The announcement by Apple of its new device HomePod, to be released in early 2018, will no doubt be strong competition, though the manufacturers do state that while the device will be AI-enabled, it will be first and foremost a high-end audio device for music. Furthermore, the emergence of third-generation virtual personal assistants, which run on local networks and are not cloud-driven, are expected to drive sales in the near future. To combat this and remain competitive, Google and Amazon have already begun to develop additional features and inclusions to improve their current products, such as incorporating smart displays and integrating technology that allows the voice-enabled device to communicate more widely, including with cars and TVs.
The evolution of technology
Technology-wise, the evolution of the internet of things (IoT) will have an impact on the voice assistant market in the future, as predicted by Global Market Insights. An increased demand for wireless connectivity within the home and the number of devices consumers own, are two driving factors within this market. Current functions such as problem-solving, have the potential to continue reshaping the market and business model, as they have done in the past.
Smart speakers impact on other devices
Additionally, the sale of smart speakers also has the ability to impact the usage of other popular devices such as smartphones. According to Accenture's 2018 findings, 64% of those surveyed across 19 countries, stated that they now use their smartphone less for entertainment purposes. Interestingly, the data also showed that consumers are more satisfied with standalone voice assistant devices than embedded voice assistant devices (94% compared to 91%).
Implications as home smart devices evolve
But with regard to future sales in the voice assistant market, Gartner predicts that there will be a slow in sales of virtual personal assistant wireless speakers, due to the emergence of other devices incorporating virtual assistants such as hubs, lighting systems and Wi-Fi mesh devices. Furthermore, voice-driven devices are more likely to be used throughout the house, including in rooms such as the kitchen and laundry where products can simply be re-ordered or noted as a virtual list for future reference.
AI and Machine Learning
The real exciting development in these devices, as mentioned by Ranjit Atwal, a Gartner analyst, is the way in which AI and machine learning are capable of evolving over time. This includes functions relating to chatbots with voice assistant devices, including remembering consumer preferences from previous interactions and avoiding repetitious conversations and eventually possibly replicating human-like conversations. These new developments and features, that have not yet been achieved, have the potential to change the market and open up unforeseen possibilities.
In conclusion, while high growth is expected within the voice-enabled device market, trends such as the development of new technologies and features, along with the evolution of smart devices embedded with voice-assistant technology, will have implications on sales and continued revenue growth.