Good News: The Smart-Speaker Wars Are About to Begin

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Apple senior vice-president Phil Schiller presents the Apple HomePod. Photo: Justin Sullivan/Getty Images

When Amazon released the Amazon Echo at the end of 2014, its success took nearly everyone by surprise. The Echo created a market new enough that there still isn’t broad consensus on what, exactly, to call it. Home speakers? Home smart speakers? Smart speakers? AI speakers? All get used interchangeably. (We’ll go with “smart speakers” for now.) But all the terms refer to the same basic idea: a speaker that sits somewhere in your home that you interact with mainly through voice, whether that’s asking it to play music or to give you the weather forecast.

Amazon has first-mover advantage. The Echo, according to some estimates, now controls about 70 percent of the home-speaker market, and this year’s Consumer Electronics Show saw hundreds of products integrating Alexa, Amazon’s cloud-based AI that it licenses to other companies for free.

The Google Home, it could be argued, is in many ways the superior product to the Echo. It understands natural language requests better than Alexa, it can differentiate between different users based on their voice, and it can place voice phone calls to anyone (not just other Echo owners). But it’s suffered from an early release that saw it unable to do many of the things the Echo could do, such as shop or allow third-party integrations. It’s since improved, and Google seems committed for the long haul, but it’s struggling to make up lost ground.

At the Apple Worldwide Developers Conference (WWDC) today, Apple, the most valuable company in the world and by far the most recognized consumer electronics manufacturer, unveiled the HomePod, entering the smart speaker market — and that changes everything.

In typical Apple fashion, the HomePod was pitched at solving the problems with preexisting products. Home speakers like Sonos sound great, but you can’t talk to them. Smart speakers like the Echo allow for voice interaction but (according to Apple) don’t sound that great. The HomePod will change all that, using a combination of high-quality audio and “spatial awareness” tech to deliver noticeably better sound than its competition. It’ll also have Siri embedded, meaning anything you can ask Siri on your phone you can ask a HomePod, in addition to using it to control smart-home devices using Apple’s Home Kit.

Also in typical Apple fashion, it’s pricing itself above the competition. While the Google Home retails for $129 and the Echo for $179 (with semi-frequent sales on both), the HomePod will go on sale for $349. This thing better sound really, really good.

Indeed, at both WWDC and in its press release, Apple is pitching the HomePod as primarily a way to play music and not as a home assistant. It “reinvents home music” — but it doesn’t reinvent the home assistant.

There are two ways of looking at this. One is that, at least anecdotally, most people still use their Echo (or Google Home) as a way to play music easily. All the other features — whether getting a quick news briefing or asking about the forecast — are secondary. So why not deliver the best sound possible?

The less generous view is that while Siri was one of the first voice assistants introduced back in 2011, it has since been surpassed by Alexa and especially Google’s Assistant, both of which are able to understand natural language better than Siri on average. So Apple is forced to focus on music, because Siri simply can’t stand up as a home assistant.

The common wisdom is that Apple is rarely first, but it’s usually best. After all, there were computers with graphical user interfaces before the Macintosh, MP3 players before the iPod, smartphones before the iPhone. But there have been other market categories where Apple hasn’t been first or best. Apple Music, despite years of work, still lags behind Spotify and was recently, according to one analysis, surpassed by Amazon Prime Music (helped, no doubt, by the rise of the Echo). The Apple TV has also struggled, with declining sales, placing it behind Roku, the Amazon Fire, and the Google Chromecast. In 2007, it made a foray into high-quality audio equipment, attempting to beat audio companies creating iPod docks at their own game with the Apple Hi-Fi. It was a disaster and was quickly pulled from store shelves. (It was also, perhaps forebodingly, priced at $349.)

But the smart-speaker market is still nascent. Per consulting firm Strategy Analytics, smart-speaker sales were up by nearly 600 percent in 2016 compared to 2015, with 4.2 million smart speakers sold in the fourth quarter (about 88 percent of those were Amazon products, and 10 percent were Google). In that same quarter, Apple sold 9.3 million iPads — a declining part of its business.

And Apple has some real advantages that Google and Amazon lack: a long track record of excellent hardware, a customer base that’s accustomed to paying more, and over 500 retail stores worldwide where potential buyers will be able to see (and hear) the HomePod before buying. To my ears, both the Echo and the Home sound pretty decent — but I’m also stacking them up against other wireless Bluetooth speakers, few of which are known among audiophiles as being particularly fantastic. Perhaps the HomePod will be such a leap forward in sound that it makes the Echo sound like a tin can. And tech geeks who have already bought an Echo might scoff at Apple’s high price tag, but Apple fans might not. (Apple-owned Beats headphones, after all, have sold spectacularly, even with audiophiles holding their nose at the sound. Branding is easy to roll your eyes at, but it works.)

There are still a lot of unknowns. Will the HomePod require you to use Apple Music? Will it work with non-iOS devices at all? At $349, few people are going to want to spread these devices throughout their home — will Apple offer something like the Echo Dot for automation control throughout the home? Apple is promising enhanced privacy, but it’s unclear what exactly that means — or how different its policies will be compared to what Amazon or Google do to protect your data with their smart speakers.

There is one certainty: Because a smart speaker can effectively keep you within a company’s ecosystem, smart speakers are about to become a battleground, with the four most valuable companies in the world (Apple, Alphabet, Microsoft, and Amazon, in that order) all attempting to capture market share in the vast majority of homes that don’t have a smart speaker. But while that sharp-elbowed competition can be tough on companies, it’s ultimately good for the consumer. There’s a decent chance a huge number of people will have a smart speaker in their home within the next decade. The question is whose speaker it’ll be.

The Smart-Speaker Wars Are About to Begin