The smart speaker revolution is coming to an end in North America as sales numbers plateau. However, growth elsewhere in the world suggests the revolution is continuing elsewhere, according to new research from Omdia.
According to Omdia’s latest smart speaker report, the compound annual growth rate (CAGR) of annual smart speaker shipments in North America is expected to be just 1.3% for 2021 to 2026, compared to compared to the strong CAGR of 118% that the market has experienced from 2014 to 2021.
In fact, annual speaker shipments for Amazon have a projected CAGR from 2021 to 2026 of -3.2% in North America, and Google won’t fare much better in the market at 0.2%. Meanwhile, Apple is expected to be one of the strongest brands from 2021 to 2026, with a CAGR of 11.7%, although this projected growth is based on the release of a new smart speaker; otherwise, Apple’s growth should be flat, according to the report, which is part of Omdia’s Smart Home Intelligence service.
“Smart speakers have become ubiquitous in the United States. In fact, the price of many smart speakers today means that price is not a barrier to further adoption,” said Blake Kozak, Principal Smart Home Analyst at Omdia. “If a consumer wants a smart speaker, getting one shouldn’t be a problem assuming a broadband connection is present.”
Kozak said reaching this saturation point is largely due to Amazon, which in 2021 had an estimated installed base of 110 million speakers in North America, nearly double Google’s installed base. . Since many homes already have multiple smart speakers, Omdia thinks consumers are starting to back off. “Additionally, since smart speakers don’t need to be replaced unless they break down, growth is about to come to a screeching halt in the North American market,” Kozak added.
Growth outside North America
Despite the stabilization of the smart speaker market in North America, the Omdia report indicates more favorable growth prospects for devices elsewhere. The global smart speaker market was worth around $13 billion in 2021, compared to around $12.1 billion in 2020. In terms of unit shipments, an estimated 190 million smart speakers were shipped globally in 2021 , and are expected to reach 273 million annual shipments in 2026, a CAGR of 7.5%.
Asia and Oceania recorded the highest number of smart speaker shipments in 2021 in terms of units shipped, with 113 million units, followed by North America with 52 million shipments, Omdia reported. Alibaba was the market leader in annual smart speaker shipments in 2021, with 42 million shipments, followed by Amazon with 37 million shipments.
China’s importance to the market is notable. Data from Omdia shows that China’s top three smart speaker brands – Alibaba, Baidu and Xiaomi – together account for 52% of global smart speaker shipments in 2021.
New use cases promise new life
Omdia expects voice assistants to continue to play an important role in smart homes. However, the smart speaker may no longer be the primary means of interacting with voice assistants by 2030. Instead, voice assistants will have dedicated use cases such as TVs, set-top boxes (STBs ), devices and over-the-top (OTT) devices with built-in microphones.
Kozak said that because the use case will be narrow, natural language understanding (NLU) could be improved beyond general-purpose smart speakers. Also, there could be more opportunities for federated learning with a narrower use case. In fact, Sonos has announced that its voice assistant will be available in June 2022, with a dedicated assistant that only controls speakers and works without the cloud.
Overall, smart speakers are evolving beyond basic use cases like playing music or weather forecasting. Later this year and in 2023, consumers can expect broader opportunities for smart speakers, especially as part of an omnichannel approach to health services, according to Omdia.
Chatbots and SMS are already part of healthcare provider strategy, and smart speakers are another modality for delivering services. For example, transcription could be part of health services, a patient talking to a smart speaker about how they are feeling. This conversation should be accurately transcribed for inclusion in a health record.
In short, Kozak said, there is a macro trend in healthcare to provider services outside of the traditional clinical environment, which provides a strong tailwind for home devices and potentially other businesses to smart speakers and IoT devices.
“The era of smart speakers is coming to an end, but the usefulness of these devices can be extended with the introduction of new use cases like healthcare,” Kozak said. “Although the smart speaker itself will soon start to fade, voice assistant technology will continue to play an important role in smart homes. But instead of residing primarily in speakers, the technology will find its way into other devices in the home and be mixed with enterprise use cases.