Since Amazon launched the AI-powered speaker Echo, smart speakers have quietly gained popularity around the globe. Both tech giants and startups alike have jumped into this space, driven by two key factors. First, Amazon's Echo has already found its way into five million households, prompting other companies to see the potential profits. Secondly, with the rise of smart homes, manufacturers have started shifting away from using mobile phones as the central hub for smart home control.
Before the advent of AI speakers, many manufacturers, including Apple, aimed to manage smart homes via smartphones. However, as AI technology advanced and concerns about mobile privacy grew, companies began exploring alternative solutions. Artificial intelligence speakers emerged as a promising replacement, acting as the new control centers for smart homes. This shift has led global manufacturers to dive into the AI speaker market.
For instance, Google unveiled Google Home, Microsoft collaborated with Manhattan to launch its own AI speaker, and Apple introduced HomePod. Among these players, Amazon’s Echo stands out due to its strong e-commerce integration. It recommends products based on user preferences and offers vast amounts of internet audio content while also controlling smart home devices.
Google and Microsoft’s AI speakers primarily focus on content services and control functionalities. Microsoft's Cortana was already capable of managing various smart home devices and engaging in human-like conversations. Apple’s HomePod differs by emphasizing high-quality music playback, making it one of the best audio devices available today.
In terms of pricing, these devices typically cost several hundred dollars, with Apple's HomePod retailing at $349.
In the domestic market, BATJ (Baidu, Alibaba, Tencent, and JD.com) have all released AI speakers. These devices generally offer internet audio content or life services like map queries and bill payments. Recently, Xiaomi also entered the AI speaker arena with a 299 yuan device that serves as both a personal assistant and a smart home hub. It can currently control eight categories of smart home devices and has opened up SDKs, encouraging more manufacturers to join its ecosystem.
One notable highlight of domestically produced AI speakers is their affordability. Alibaba’s AI speaker retails for just 499 yuan, Xiaomi’s for 299 yuan, and JD.com’s also at 299 yuan. Consequently, domestic manufacturers have quickly plunged into a price war early in the AI speaker market. This situation arises from three main factors:
Firstly, most AI speakers released in China are voice-interaction devices rather than true AI speakers. The development of AI relies heavily on technology and data. Among domestic manufacturers, Baidu is considered one of the few genuinely mastering AI technology. Other companies are often limited to intelligent voice interaction technologies. Therefore, the AI speakers they release lack the depth of true AI technology. For example, Microsoft's AI speakers are built on Cortana, while Amazon, Apple, and Google rely on Alexa, Google Assistant, and Siri respectively. None of these virtual assistants were developed overnight.
Apple, for instance, began integrating Siri into iPhones in 2011 but only launched its AI speaker equipment six years later. Its primary function remains music playback, not full-fledged AI capabilities. Given this context, domestic manufacturers cannot quickly roll out genuine AI programs. Xiaomi and others currently lack their own AI voice assistants.
Secondly, domestic manufacturers seem overly eager to capitalize on the trend without fully committing to product development. Companies like Alibaba, Tencent, and JD.com are primarily service-oriented and rarely operate in the hardware sector. Yet, when AI speakers suddenly became popular, they rushed to release their own devices simply to jump on the bandwagon. Xiaomi fares better, as its AI speaker can control eight categories of smart home devices and has opened an interface to encourage third-party integrations. However, it still lags behind in offering comprehensive features compared to global competitors.
Finally, entering the high-end market is prohibitively expensive, leaving domestic manufacturers stuck competing on low-end prices. The internet industry has long been dominated by the U.S., with Chinese companies playing catch-up. Domestic internet firms have historically relied more on service revenue than technology innovation. This has limited their brand influence and technological prowess compared to foreign rivals, making it impossible to compete at the same price point.
When it comes to electronics like PCs and smartphones, the domestic market is already controlled by foreign brands. Chinese manufacturers survive in the low-end segment and struggle to make headway in the premium market, despite their efforts.
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