Q1 Sales Soared Nearly Five Times, and the Smart Speaker Giant Fought Hard in the Second Half

After experiencing the "calm" after the tuyere, the smart speaker industry gradually recovered and "broke out" in the first quarter of 2019. A year ago, media reports also focused on "more than 200 smart speaker companies facing bankruptcy" and "smart speaker foundry losing money".

Recently, the reporter interviewed Jing Kun, head of Baidu small speaker and vice president of Baidu. He told reporters that many hardware had the experience of "the air outlet came and the air outlet went", mainly because they did not reach the "critical point of user experience". Dong min, vice president of ovicloud, told the daily economic news that with the entry of giants and the "price war", the smart speaker market is becoming rational and the number of new entrants is gradually decreasing. However, after the scale, the profit challenge is also in front of the enterprise.

â–² global smart speaker Market shipment (million units) and market share in the first quarter of 2019 data source: strategy analytics Zou Li mapping

Start to get rid of the positioning of "geek plaything"

In 2014, Amazon released the smart speaker Amazon echo equipped with smart assistant Alexa, and then there was a global boom in smart speakers. Since 2015, there has been a "thousand box war" in China, and it has entered the stage of intense competition in 2017.

Hu Hongsen, a technology consumer electronics industry observer, told the daily economic news: "smart speakers are endowed with the function of smart home entrance, so many manufacturers intervene to seize the opportunity in the future." in addition, in the view of people in the industry, voice is an important carrier for the implementation of artificial intelligence technology. When AI technology companies are worried about the commercialization of artificial intelligence, Smart speakers have become one of the few choices.

Among them, there are enterprises represented by iFLYTEK, Baidu, Alibaba and Tencent, which have AI voice capability, cut into the field of intelligent speakers and look for AI commercialization scenarios; Some mobile phone companies, such as Xiaomi and Huawei, hope to copy their successful models in the mobile phone field; There are also content platforms represented by Himalayas, trying to take audio content as a breakthrough.

Jing Kun believes that the success of smart speakers mainly depends on three aspects - sales, hardware technology and user experience. "In the past, many manufacturers have been doing smart speakers, but they have not broken through the critical point of experience, so there will be no word-of-mouth effect." in Jing Kun's view, if the experience of smart speakers does not meet the standard, users will not use it on the first day, the second day, and the third day. The "critical point of user experience" can be said to be the decisive factor.

According to the statistics of strategy analytics, an international consulting and survey organization, 86.2 million smart speakers were sold worldwide in 2018. In 2019, this data will reach an amazing 140 million units, which is expected to become a new phenomenal hardware product other than smart phones.

According to the data released by canalys, the domestic smart speaker market increased by nearly 500% year-on-year in the first quarter of 2019, reaching 10.6 million units. Among them, the total shipments of Baidu, Alibaba and Xiaomi reached 9.7 million units, leaving very little space for other enterprises.

Small factories "ebb tide". After the cultivation of several giants, smart speakers have been gradually recognized by users and are no longer the "plaything" of digital geeks.

"Subsidy war" between giants

The reporter observed that compared with 2017, there were few smart speaker startups to update or release products in 2018, except baidu, Alibaba, Xiaomi and other manufacturers.

Although the heat of the industry has cooled down, the "price war" between giants has not stopped, and the phenomenon of "relying on subsidies to compete for the market" always exists. "At present, smart speakers are in the stage of rapid development and popularization, but the popularization process is' manual ripening 'by giants, and there are great subsidies at home and abroad," Dong Min said.

At the end of March 2018, baidu launched the first intelligent video speaker in China, and also brought "entry-level" products of about 100 yuan. In the price announcement session, Baidu founder Robin Li joked that the original price was 1599 yuan, and finally cut off the "1", the bottom price of 599 yuan. Although it may be a joke, we can also see Baidu's determination to subsidize smart speakers.

"At the beginning of 2018, the Department tried the first smart speaker. In fact, it had a lot of courage. Because Baidu didn't systematically and formally set foot in large-scale hardware, and our sales channels were not complete at that time," Jing Kun recalled to reporters.

This "price war" is more obvious on double 11. In November 2018, baidu announced a series of price cuts and promotions, including the reduction of Xiaodu with screen speaker to 299 yuan at home and the double eleven of Xiaodu smart speaker Pro version from 399 yuan to 169 yuan. On Alibaba's side, on the day of double 11, tmall Genie dropped 130 yuan, and the hand price was only 69 yuan.

According to the official data of tmall in 2018, the consumer electronics industry champion spent the smart speaker for the first time on double 11. The sales champion was tmall elf, rather than the traditional consumer electronics products dominated by mobile phones in the past. Canalys data show that throughout 2018, the domestic shipments of smart speakers reached 21.9 million units, reaching a climax in the fourth quarter, and the three-month shipments have exceeded the annual shipments in 2017.

The Spring Festival is not the traditional peak season for sales promotion. However, baidu chose to advertise on the 2019 CCTV Spring Festival Gala to continue the previous price reduction and promotion. This misplaced marketing method has indeed had an effect. In the first quarter of 2019, the shipment of small smart speakers reached 3.3 million units.

Baidu, which came from behind, surpassed Alibaba and Xiaomi and became the first in the domestic smart speaker market share. From the current data, the smart speaker market mainly includes Baidu "Xiaodu", Xiaomi "Xiaoai" and Ali "tmall elf", which seems to have become a "game between giants".

In Dong min's view, the reason why enterprises are so keen on subsidies is that smart speakers are not the rigid demand of consumers in the early stage. If they want to develop rapidly, they need to cultivate the market with huge subsidies. After having a certain number of users, it is possible to realize value realization, improve the voice over the supply chain and developers, and build their own competitive barriers.

How to make profits in the future?

"The 'War' of domestic smart speakers has been relatively clear to the head players. As for when it will end, it depends on who can develop continuously and healthily. In the next year or two, they will compete with each other and go hand in hand." Jing Kun commented on the current situation of domestic smart speaker industry.

However, subsidies will eventually stop. After experiencing the "price war", smart speakers need to return to serve the profitability of enterprises. According to Baidu's financial report, in the first quarter of 2019, other cost items of the company reached 3.5 billion yuan, a year-on-year increase of 75%. Intelligent hardware subsidies have had a certain impact on profits.

In fact, baidu does not seem to plan to make money by selling hardware. In an interview with the daily economic news, Jing Kun said that Baidu group has no commercial profit requirements for small speakers, which belongs to the investment period, and there is no timetable for when to cancel the subsidy.

Jing Kun introduced that the intelligent voice assistant Xiaodu is Baidu's search and information flow in the future, a natural extension of home search, and the logic of Baidu's continuous overweight Xiaodu intelligent speaker. Jing Kun told reporters: "the previous Internet business model was basically based on scale. Baidu is an Internet company, not a hardware company, so in terms of hardware, Baidu's main focus is on user experience and scale." he revealed that in the future, small speakers may try some member services and charge for specific content.

"Smart home entrance" is the most important factor for giants to value smart speakers. All enterprises hope to control household appliances through voice, so as to create ecology.

The reporter also noted that Baidu recently appeared in the list of intended investors of Gree mixed reform. From the outside world, baidu hopes to enter the field of smart home.

However, in Hu Hongsen's view, baidu still needs to strengthen in the field of smart home, and its smart speaker ecology needs to further expand, link more connectable devices, or reach an agreement to become a third-party platform, so as to have greater market opportunities in the future.