Sci-fi fans, gadget geeks, and futurists have been awaiting the arrival of automated “smart houses” for a very long time—from the early 1950 prototype of a “push-button manor,” to the Jetsons’ technicolor visions of leisurely life in a home run by robots, to the surprisingly prescient 1999 Disney Channel original movie Smart House.
Those dreams remained firmly in the realm of fantasy until the late 2010s, when big tech companies began mass producing smart speakers. The gadgets, which come with voice assistants eager to do consumers’ bidding, are crucial for making any real-world home “smart.”
Smart speakers are expected to be a future-dweller’s main point of contact with their automated home. In their current iteration, you talk to the speaker, and it relays your commands to a web of connected devices that can turn on a lightbulb or change the thermostat or get a pot of coffee brewing. The speakers also wield a good deal of behind-the-scenes market power: When you ask a question, the voice assistant routes your query through a preferred search engine; when you ask it to restock your laundry detergent, it directs your order to a favored ecommerce platform.
It’s no wonder then that tech giants are investing billions of dollars to develop devices that today regularly lose them money. Amazon, Google, and Apple are battling for control of the smart speaker market outside of China. The firms are betting that the gadgets will become the conductors of a symphony of devices that run our future homes, and important gatekeepers for consumers’ search and shopping habits.
In virtually every market outside China, where Alibaba, Baidu, and Xiaomi fight for market share, the smart speaker fight comes down to Amazon and Google, with Apple trying to catch up from a distant third place.
Amazon was the first to enter the market in 2014, and has maintained its lead through money-losing discounts, BOGO sales, and free giveaways. Google jumped in two years later with a line of smart speakers comparable to Amazon’s in quality and price. It has been chipping away at its rival’s dominance ever since.
Apple followed in 2018 with the high-end HomePod, which debuted at a price 10 times greater than its competitors and has never been as popular. The company tried again with a cheaper model in 2020, but still hasn’t made significant inroads with consumers.
The companies have marketed their speakers as all-in-one tools that would connect with an array of gadgets to help users manage their hectic home lives. The profit margins on the latest offerings from Amazon, Google, and Apple are reportedly razor thin, but the firms have so far been willing to accept losses as long as getting their speakers out there helps them stay relevant. “It’s another way for them to feed their core businesses,” said David Watkins, an analyst at the market research firm Strategy Analytics.
Each of these companies is fighting to defend its turf in a field it already dominates. Google wants to maintain its stranglehold on search as consumers begin directing more of their queries to voice assistants. Amazon is hoping to push any online purchases a customer might make through voice onto its ecommerce platform. And Apple is looking to stay relevant in the world of high-end home gadgets.
If any of these firms misses a step, it could find itself unseated by a rival that’s quicker to adapt to voice assistants. Nokia and Blackberry learned that lesson the hard way at the dawn of the smartphone era, argues Bret Kinsella, CEO of Voicebot.ai, a site dedicated to tracking the smart speaker industry. The formerly dominant phone makers got supplanted by Apple and Samsung, which were faster to make the switch to smartphones. The rise of smart speakers, Kinsella wrote in Harvard Business Review, offers a similar opportunity to redefine the competitive landscape in tech.
The companies are also battling for another prize: having the run of your house. “It’s a fight over real estate,” said Josh Lowitz, co-founder of Consumer Intelligence Research Partners (CIRP). “When you’re going to automate your house, you’re not going to have multiple systems. You’re going to be an Amazon home or a Google home or an Apple home.”
Even today, there are lots of internet-of-things appliances out there that you can control via their own screens or apps. But if you want the convenience of controlling your home with voice commands, you’re stuck figuring out whether a given gizmo works with your voice assistant.
Currently, the market for smart-speaker-compatible devices is fragmented between those that work with Amazon’s Echo, Google’s Nest, or Apple’s HomePod. Buying one brand of speaker locks you into a limited universe of compatible gadgets. A smart speaker, then, could give companies a foot in the door to sell a whole range of related products—smart light bulbs, security systems, appliances, and so on.
“You can create a really nice ecosystem where, once you have market share and you have a complete offering [of smart products], it’s going to be really hard for your competitors to compete with you,” said CJ Bangah, a principal at financial services giant PricewaterhouseCoopers, which conducted surveys and focus groups for a 2018 report on voice assistants.
The companies have vowed to break down the barriers between their walled gardens through an Amazon-led effort to develop a shared communication protocol that would allow any device to work with any speaker. But even so, Bangah says many consumers will likely stay within one company’s universe of products, if only to spare themselves the effort of shopping around. “A lot of customers we talked to were not looking to have to do a tremendous amount of research to figure out what they went with,” she said.
While the companies vie for dominance in a nascent field of tech, their customers’ motivations are a little more simple. “For a number of consumers, the reason why they bought a smart speaker or used a voice assistant is because they thought it was cool,” said Bangah.
That enthusiasm has sold hundreds of millions of speakers worldwide over the past six years. But recently, the novelty seems to be wearing off. “We get the sense [from market research] that over the last 12 to 18 months that there’s a bit of fatigue setting in,” said Watkins. “There’s been no real amazing use case that’s emerged that has meant that people can’t live without these devices.”
The biggest problem is that the technology isn’t fully mature. Using smart speakers to control connected devices remains a buggy, frustrating experience. Internet outages and service interruptions can unexpectedly render crucial household appliances useless. There’s a Twitter account dedicated to smart home schadenfreude, documenting distressed devices like grills stuck in the middle of software updates and meat thermometers struggling to connect to the internet.
“For smart speakers to start to really pay off, we’re going to need a much more robust ecosystem of home gadgets,” said Michael Levin, Lowitz’s partner at CIRP. The gadgets have come a long way from where they were in the mid 2010s, when pairing a lightbulb to a voice assistant could swallow up an afternoon—but Lowitz and Levin say the user experience has to get much simpler still to encourage consumers to link multiple devices to their speakers and see the full benefit of having a connected smart house.
Then there are the perennial concerns about security and privacy. Hackers have broken into baby monitors and used millions of compromised smart gadgets to launch attacks that have taken Twitter, Spotify, and other sites offline. Amazon, Google, and Apple all got caught in 2019 listening in on snippets of users’ interactions. Amazon and Google constantly monitor customers’ devices, and Roomba vacuums create detailed maps of their owners’ homes that can be shared with third parties. There’s some limited evidence that competition between companies is making privacy issues better for consumers: Google came out with a video smart speaker that had no built in camera, which may have prompted Amazon to create a shutter users could put over the camera on its devices.
Despite these growing pains, users have found a handful of clear-cut use cases that are fully fleshed out. The speakers are good at playing music on demand, answering basic questions, and checking the weather. “These are great use cases, but they’re relatively simplistic for what is actually possible with this technology,” said Bangah.
As companies continue to vie for control of the market, they’ll have to find ways to bring their speakers and gadgets closer to the sci-fi future their customers are imagining. If they can squash the bugs, expand their product offerings, and retain users’ trust, the firms will be on their way to realizing consumers’ decades-old dream of living like the Jetsons.