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More Evidence That Apple Needs to Launch a Siri Speaker

By Evan Niu, CFA – Updated May 9, 2017 at 2:49PM

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It will probably have a display, too. (AMZN 1.26%) has effectively sparked an arms race in a product category that no one saw coming. Echo's success was surprising in part because Amazon launched a decidedly immobile device in an era of mobile devices. The fact that Echo is stationary is extremely important because it reset consumer expectations: It would always be on, and you don't have to remember to charge it.

By the looks of it, Apple (AAPL 1.56%) may finally enter the market for virtual assistant-powered stationary speakers a month from now. Can the company continue its streak of being the best in a market even if it's not the first?

Amazon Echo on a bookshelf

Image source: Amazon.

Adoption is soaring

eMarketer has just put out a report on the voice-activated speaker market, and the researcher's estimates suggest that Amazon continues to utterly dominate this product category. For 2017, an estimated 35.6 million consumers in the U.S. will interact with a voice-activated speaker on a monthly basis, up a mind-boggling 129% from 2016. Of those, 71% will be talking to Alexa while just 24% will be speaking to Alphabet's (GOOG 2.65%) (GOOGL 2.81%) Google Home. Smaller players like LG Electronics and Lenovo, among others, fight for the scraps.

Amazon's first-mover advantage has proven quite important, according to eMarketer analyst Martin Utreras. Prices are coming down while virtual assistants simultaneously become more powerful, which is spurring consumer adoption. Meanwhile, consumers are "becoming increasingly comfortable with the technology," according to Utreras.

Apple's product will probably have a display

Over the weekend, Apple marketing chief Phil Schiller had an interview with NDTV, and Schiller took the opportunity to talk about the category. In a jab at Amazon Echo and Google Home, Schiller opted not to address either product specifically, citing the old adage of "if you don't have something nice to say, say nothing at all." It seems clear at this point that Apple does have something in pipeline, given rising popularity of voice-activated speakers. Schiller also hinted that Apple's offering may have a display, unlike Echo and Home:

First of all, there is a lot of talk in the industry about voice-driven assistants and we believe deeply in voice-driven assistants that's why [we] invest in Siri, but there is interest in a voice-only assistant, where there is no screen, and we think it's important to that there are times when it's convenient to simply use your voice when you are not able to use the screen. For example, if you're driving [and] you want Siri to work for you without having to look at the screen, that's the best thing. Or maybe you're across the room, and you want to ask Siri to change the song you were listening to -- you don't have to walk over and back [and you can use Siri instead].

So there's many moments where a voice assistant is really beneficial, but that doesn't mean you'd never want a screen. So the idea of not having a screen, I don't think suits many situations. For example if I'm looking for directions and I'm using Maps, Siri can tell me those directions by voice and that's really convenient but it's even better if I can see that map, and I can see what turns are coming up, and I can see where there is congestion, I understand better my route, and what I'm going to do.

Schiller continued, highlighting both photography and games as other types of content that don't lend itself well to a screen-less device. It's pretty hard to imagine a voice-only game. It's probably worth pointing out that Amazon appears to be working on an Echo product that has a touchscreen, judging by recently leaked renderings.

There's no real way to tell why Amazon omitted a display in the first place. Presumably, it could have been to cut costs, since displays are often the most expensive component of any device. But it seems preferable to at least have a display so that consumers have the option of using it, as there are plenty of contexts (like those Schiller mentioned) where having a screen improves the experience and functionality.

As with most things Apple, we still don't know what we don't know, but the good news is we may not have to wait long to find out.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has a disclosure policy.

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