Winners and Losers in the Smart Speaker Wars (Premium)

For all the change brought on by personal technology, there's been one constant over the years: The market can generally support only two major players within any given platform type. It was true of PCs, and it's true with smartphones and tablets too. So we naturally begin looking at emerging platforms, like that for personal digital assistants, and wonder if we're going to see the same shakeout over time.

I think its highly probable.

But let's first define what it is we're talking about. I generally think of this topic as ambient computing, because it's something that happens around us. But Microsoft and other firms refer to the AI behind ambient computing as digital personal assistants, an attempt to bridge the unknown---AI and machine learning---with a simple concept that most people would understand.

Ambient computing is something that will happen over time, but it had to start somewhere. So platform makers like Apple, Google, Microsoft, and Samsung began with the device that we all carry around with us all day long: Our smartphones. Amazon, meanwhile, has no position in smartphones, so they created a home appliance called Echo, which was the start of what's now called the smart speaker market.

But smart speakers like Echo are bridge technology, a way to get from the past to the future. In our ambient computing future, the speakers, microphones, and IoT-like guts that provide this functionality will be everywhere, and in everything, and we won't need to think about where we are: We will simply speak to an AI back-end, and it will serve our needs. We need smart speakers today because that infrastructure isn't available yet.

So we'll call these things smart speakers for now because that term is even more well-understood than digital personal assistant. But it is fair to say that success in today's smart speaker and smartphone markets will collectively define which ambient computing platforms are left standing a few years down the road.

And, so far, there are only two strong players. Amazon, which surprised us all with the Echo smart speaker and its Alexa personal digital assistant. And Google, which controls the digital devices markets and has made rapid progress with its Google Assistant over the past year or so.

Most would likely credit Amazon with the win so far. But I don't see it that way: The market for smart speakers is relatively tiny, in the low single digit millions of units, while there are literally billions of Android smartphones out in the world. And let's get real: When you want to know answers to questions, you turn to Google. We turn to Amazon when we want to buy things.

That said, the market for smart speakers could grow dramatically in the years ahead. A recent report from Juniper Research, for example, predicts that 55 percent of U.S. homes, or over 70 million of them, will have a smart speaker within 5 years.

If that's true, the total installed base of smart speakers will be over 175 millio...

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