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 million units. And Juniper notes that it expects the total size of the personal digital assistant market to be about 870 million units, a figure that includes smartphones, other digital devices, and vehicles.

So Amazon will continue to play a big role in this market, alongside Google, which I expect to eventually emerge as the clear market leader, as it did in smartphones and tablets. Both already offer an affordable and attractive range of device choices for the home.

But what about the rest of the market? After all, Apple, Microsoft, and Samsung all offer their own digital personal assistant solutions too.

Apple can be credited with getting to the smartphone first with Siri, and its faithful fan base will ensure that it always has at least some minority position in the market. But Siri will likewise always be the least capable of the assistants made by major platform makers because Apple doesn’t have the infrastructure and expertise of companies like Google and Microsoft. And it relies too much on local, device-based AI logic that won’t compromise user privacy.

It doesn’t help that Apple just delayed its first smart speaker, the HomePod, past the 2017 holiday selling season, though. Pre-announced mid-year, the HomePod has always been vaporware. But now that Apple has made it official, the Sonos of the world can breathe a sigh of relief: Apple has tried to side-step head-to-head comparisons by focusing on music with the HomePod. But HomePod won’t arrive until next year, and it probably won’t do more than the basics for the next few years at least. This one is an expensive niche product for the affluent only. Like a lot of Apple’s products.

Microsoft? It’s an also-ran, of course. If you go back and read my Cortana piece from January, you’ll see that the software giant was playing a long game, and that it expected Cortana to emerge as the only truly-necessary assistant because of its deep ties to Office 365 and our daily work.

Many months later, only a single Cortana-powered speaker, the Harman Kardon Invoke, has limped into the market, and its overpriced. No matter the quality—and it is a very nice speaker—a single option isn’t going to change anything in this market. (That said, the Invoke did ship well ahead of Apple’s HomePod. That’s pretty hilarious when you think about it.)

As for Bixby, Samsung’s sad entry, one gets the feeling that it exists solely to further the company’s unspoken goal of eliminating Google and going it alone. That is, Bixby doesn’t do anything better for the people who may use it, it simply furthers Samsung’s competitive goals. And that is no way to design any product. Today, Bixby makes even Siri look compelling by comparison.

But everything could change yet again. And it’s also possible that ambient computing will not follow the same competitive path as previous personal computing platforms. That the interoperable nature of AI is what will elevate this technology above the platform squabbles of the past. After all, personal digital assistants and the smart speakers they power are only useful when they can interoperate with every single service imaginable. This can and should include integration with other AIs.

And this is already happening. It’s starting, as it must, with the also-rans. Samsung announced recently that it is opening up Bixby in an attempt to make it more essential. And Microsoft has announced a vague integration of Cortana with Amazon’s Alexa. Microsoft needs this integration, broadly, and Amazon is interested in stealing away Cortana’s one key advantage. Competition makes for strange bedfellows, for sure.

Whatever happens, this market matters. Companies like Apple, Google, and Microsoft often fantasize openly about what they believe will be the next big thing—smart watches, perhaps, or, as comically, mixed reality—when, in fact, the future is all around us.

It’s called ambient computing. And it is happening right now.