MARKET PROJECTIONS

• Around 35.78 million U.S. households owned at least one smart speaker in 2018. That share is projected to reach around 51.99 million and 101.69 million by 2020 and 2025, respectively.
• The rate of growth of smart speakers in the United States to 2020 and beyond (2025) is projected at approximately 16.09 %.
•  Statista Research Department predicts that the household penetration rate of smart speakers in the United States will grow from around 28% in 2018 to 40% in 2020, and reach 75% by 2025.
• This is consistent with Loup Ventures analysis that estimates that "75% of U.S. households will have smart speakers by 2025" a rise from 28% in 2018.
• Joint Center for Housing Studies (JCHS) projected that the number of households in the United States would increase by roughly 11 million during 2015-2025.
• According to the US Census Bureau, the number of households in 2015 was about 124.59 million.

RESEARCH STRATEGY

MOST COMMONLY USED PLACES

• Adobe Analytics survey reveals that smart speakers are mostly used in the living room by U.S. owners, about 63% on a relative user basis.
•  Forty-two percent of the owners report that they use the device in their bedroom, and 37% in their kitchen.
•  Twenty-two percent of smart speaker owners surveyed by Adobe Analytics said that they have such a device in their office. "Bathroom use is at 13%, and only 5% reported having a smart speaker outside."

CONSUMER ENGAGEMENT WITH BRANDS

• The Smart Audio Report reveals that eight in ten smart speaker owners (or 80%) in the United States are very tolerant of brand participation. They are open to brands creating skills and features to communicate with them.
• However, a recent survey conducted by NPR and Edison Research of 1,800 consumers found that only 43% of smart speaker owners in the country would be interested in using the device to connect with brands they follow on social media. This research is echoed by multiple publications, including Musically, Stella Rising, and Retail Wire.
• Data from Google and Peerless Insight reveals what smart speaker owners would like from brands. Fifty-two percent are most interested in receiving information about deals, sales, and promotions from brands.
• Another survey, the U.S. Smart Speaker Consumer Adoption Report 2019, found that 31.4% of smart speaker owners in the U.S. want to use their devices to engage with brands through the customer service departments.
• Over 50% of owners nationally are using the device to shop. Around 38% are using it to buy groceries, and about 26% are doing so regularly.
• Approximately 42% are buying household products or toiletries this way, and over 43% "are buying other types of goods via their device."

RESEARCH STRATEGY

HELPFUL FINDINGS

U.S. Business Smart Speaker Usage

• By 2018, there were over 50,000 Alexa skills globally, compatible with about 20,000 different devices, and utilized by over 3,500 brands.
• The number of Alexa skills in the US by 2018 exceeded 30,000.
• Specific to companies, several prominent household brands in the United States (e.g., LEGO, Betty Crocker) have created applications or skills to interact with consumers and promote their offerings.
• The companies that witnessed the most frequently named “branded” skill/application administered by owners of smart speakers were Tide (6%), Glad trash bags (5%), Quaker Oats (2%), Campbell’s soup (2%), etc.
• Some news companies with Alexa skills include: NPR’s Alexa skill known as NPR News Now, The Wall Street Journal skill, which provides command-based answers on news summary, latest podcasts, market updates, and the CNN Alexa news skill.
• According to the 2017 Enterprise Tech End-User Sentiment Survey from Unit4, 38% of specialists declared that they employ a digital assistant similar to Alexa for personal reasons. Meanwhile, 11% maintained that they use it for professional reasons.
• Around 91% of decision makers at companies are conducting major investments in voice technologies.
• At least 88% of business decision makers claimed they plan to uphold numerous voice assistants (e.g., Apple Siri, Google Assistant, and Amazon Alexa).
• Less than one-third (22%) of companies in the U.S. have released a voice app, while about 44% intend to do the same during 2019.

Reasons for using smart speaker skills for their businesses

• According to a 2018 Strategy Analytics Consumer Survey, in the United States, more than two-thirds (61%) of smart speaker users utilize an Amazon device, and therefore, news sites publishing to audience that speak English "have the most to gain from creating an Alexa skill news show for their brand."
• A survey from Adobe revealed that U.S. consumers are routinely utilizing smart speakers to review news and weather updates and enjoy music.
• By September 2018, in the United States, the potential smart speaker audience reach amounted to 57.8 million, and it was expected to exceed 60 million by the conclusion of the year.
• Other reasons include the fact that smart speakers are more convenient than podcasts, they act as an additional revenue stream, and future proofing news sites.
• According to a survey done by Adobe, the three leading objectives of companies investing in voice apps are :
• Enabling customer purchase (45% of the surveyed respondents)
• Tracking orders (45% of the surveyed respondents)
• Facilitating renewals and repeat purchases (44% of the surveyed respondents)

Research Strategy:

Findings

1. The Data

• Smart speaker skills have been described as "akin to apps on a smartphone, that unlock capabilities such as reading recipes or ordering pizza."
• Due to the huge number of smart speaker skills (over 15,000), we needed a categorized way through which to analyze those skills with regard to business categories that use those skills. For that, we found a list of the categories for all smart speaker skills published on the website for Amazon Alexa. That was key information because it allowed us to group the huge number of smart speaker skills and analyze them with regard to the business categories.
• We chose Amazon Alexa as our source for smart speaker skill categories because that particular smart speaker has a 70% share of the U.S. smart speaker market per an article published by Marketing Land in August 2019.
• The first category of smart speaker skills is Custom Skills. These skills involve performing a vast array of routine tasks, such as looking-up information or ordering food. In fact, the Custom Skills category is so broad that it can involve practically any type of action that's able to be properly coded.
• The second category of smart speaker skills is Smart Home Skills. These skills are able to perform directives such as changing TV channels, turning lights on, or changing the temperature.
• The third category of smart speaker skills is Flash Briefing Skills. These skills involve information feeds and do things such as telling people news headlines or providing briefings on a certain topic, based on text or audio information.
• The fourth category of smart speaker skills is Video Skills. These skills involve controlling videos such as changing channels or playing content.
• The fifth category of smart speaker skills is Music Skills. These skills "provide audio content such as songs, playlists, or radio stations."
• Lastly, the sixth category of smart speaker skills is List Skills. These skills are able to do things such as remove items that are on a list, add items to lists, or update items that are included on a preexisting list.
• After establishing those skill categories, we then looked for and found a list of business categories. Twenty-five business categories were included in that list, which are included below and in the Google Doc checklist.

2. Our Checklist

• To determine the business categories that use the most smart speaker skills, we decided to make a checklist in this Google Doc.
• We structured that checklist so that we could mark each smart speaker skill category that's part of each business category's core business operations.
• We then completed that checklist accordingly.
• We determined the top five business categories that use the smart speaker skills by counting the number of check marks for each business category.
• Those calculations determined that Travel/Lodging, Media & News, Real Estate, Recreation & Sports, and Healthcare are the five business categories that use the most smart speaker skills. Each of those five business categories use five of the six smart speaker skills categories. In fact, those were the only five business categories that use that number of smart speaker skills, so these were indeed the top five business categories per our analysis.
• With the exception of Custom Skills and List Skills, we provided at least one example of a smart speaker skill for each business category that had a corresponding check mark (e.g. the Entertainment & Arts business category uses Music Skills, so we marked that box in the checklist and provided an example of such usage as part of its core business operations). All those examples are listed in the next section of our research findings below and thus are not provided in the checklist.
• All the business categories use Custom Skills (due to the vast nature of such) and List Skills (because all businesses make and use lists), which is why we checked that box for each business category.
• An "X" mark in the Google Doc means that the business category uses that smart speaker skill as part of its core business operations.

3. Examples of Smart Speaker Skills Used By Each Respective Busines Category

• As was previously noted, this section contains at least one example of a smart speaker skill for each business category that had a corresponding check mark in the checklist.
• The following findings (sub-sections A, B, and C) include each business category that we analyzed, followed by the smart speaker skills that each business category uses as part of its core business operations (excluding Custom Skills and List Skills for which no examples are provided, as was explained above). At least one example of each such skill is provided.
• Since there are 25 business categories, we broke them up into three different groups for better readability.

A. Business Categories 1-8

• Entertainment & Arts: Video (movies, shows) and Music (soundtracks, songs)
• Auto Service/Sales: Custom and List only
• Finance/Banking: Flash Briefing (business news)
• Accounting/Tax: Custom and List only
• Business Services: Flash Briefing (business news) and Video (meeting/presentations)
• Community Organizations: Video (meetings/presentations)
• Dental/Orthodontics: Music (waiting rooms)
• Education: Video (educational videos for students) and Music (educational songs for students)

B. Business Categories 9-16

• Health/Wellness: Video (instructional videos) and Music (gym/workout soundtracks)
• Healthcare: Flash Briefing (business/health news), Video (instructional videos), and Music (waiting rooms)
• Home Improvement: Smart Home (installations) and Video (step-by-step instructional videos)
• Insurance: Custom and List only
• Web/Internet Services: Video (website development and content marketing) and Music (content marketing)
• Legal: Flash Briefing (business/legal news)
• Travel/Lodging: Smart Home (room light control), Flash Briefing (flight status), and Music (lobbies/entertainment areas)
• Advertising & Marketing: Video (content/advertisements) and Music (content/advertisements)

C. Business Categories 17-25

• Media & News: Flash Briefing (news story updates), Video (content), and Music (content)
• Pet Services: Custom and List only
• Real Estate: Smart Home (selling a house), Flash Briefing (business/market news), and Video (presentations)
• Restaurant: Music (playing music in the dining rooms and lobbies)
• Retail: Music (playing music in-store)
• Recreation & Sports: Flash Briefing (game scores, team standings, and news), Video (broadcast and content), and Music (in-stadium and content)
• Transportation: Custom and List only
• Utilities: Custom and List only
• Meetings & Events: Video (presentations) and Music (background music at events)

Your Research Team Applied the Following Strategy:

PROJECTED REVENUE

• The US smart speaker market is expected to generate revenues worth $9 billion by 2023, "growing at a CAGR of approximately 21% during 2018-2023."
• The 2018 smart speaker market in the United States is estimated at $3.47 billion— determined using the CAGR calculator, where the final value is ($9 million), rate (21%), and period (5).
• The end-user segment is divided into residential/personal and commercial/business users, with the former's revenue leading the latter.
• According to Computer World, the smart speaker space in the US is fast-moving, and "the sales figures are impressive but very little of the market’s growth is driven by business users."
• The global smart speaker residential sector holds a market share of 82% of the overall market. Assuming that this rate also applies for global regions like the United States, then the residential sector's market share is 82% and the business sector in the country is 18%.
• Therefore, the revenue for businesses driven by smart speaker usage is approximately $624.6 million (18%*3.47bn) in 2018.
•  Research and Markets predict that the commercial end-user segment will grow at a CAGR of about 33% during 2018-2023.
• Hence, in 2023, the revenue for businesses driven by smart speaker usage will reach approximately $2.6 billion — calculated using the CAGR calculator, where the initial value is $624.6 million, the rate is 33%, and the number of periods is 5.

RESEARCH STRATEGY