Smart Speaker Volumes Nearly Doubled in the Fourth Quarter

Amazon and Google maintained their grip on the market.

Evan Niu
Evan Niu, CFA
Feb 19, 2019 at 2:45PM
Technology and Telecom

Smart speakers must have been a popular gift over the holidays, as worldwide unit volumes nearly doubled in the fourth quarter. Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google expectedly retained their dominant positions in the booming market, representing the bulk of sales thanks in part to growing portfolios of devices available at a plethora of price points. Apple (NASDAQ:AAPL) made some progress growing HomePod shipments, but it still accounts for a tiny portion of the market.

Here's the latest data on the smart speaker market.

Check out the latest Amazon earnings call transcript.

Echo Dot on a table next to a lamp and a small vase with a plant in it sitting on a book

Low-cost devices like the Echo Dot are extremely popular. Image source: Amazon.

The smart speaker market is booming

Strategy Analytics has released its estimates for the fourth quarter, and they show that total shipments jumped 95% to 38.5 million, bringing full-year 2018 shipments to 86.2 million. In fact, the number of smart speakers sold in the fourth quarter alone was greater than all of 2017. Here's how the top players fared, according to the report.

Vendor

Q4 2018 Shipments

Q4 2018 Market Share

Amazon

13.7 million

35.5%

Google

11.5 million

30%

Alibaba

2.8 million

7.3%

Baidu

2.2 million

5.7%

Xiaomi

1.8 million

4.6%

Apple

1.6 million

4.1%

Data source: Strategy Analytics.

Spotify also ran a promotion in the fourth quarter, giving away free Google Home Minis to family plan account holders in the U.S. The Swedish music-streaming company previously estimated that the offer would hurt its gross margin in the fourth quarter to the tune of 50 basis points, suggesting it spent around $8.5 million and potentially contributed around 170,000 to Google's volumes.

The relatively new product subcategory of smart displays is gaining traction, offering more versatility and functionality than devices without displays, as relying entirely on voice control can be clunky at times. Amazon had released the first-generation Echo Show in 2017, but refreshed the device last year around the same time that Google introduced its Home Hub. Smart displays now represent roughly 10% of the market and are expected to help drive growth in 2019, according to Strategy Analytics.

"Smart speakers and smart displays were once again the most sought-after tech products this past holiday season and we estimate that more than 60 million households worldwide now own at least one device," Strategy Analytics director David Watkins said in a statement. "Smart displays such as Google's Home Hub, Amazon's Echo Show and Baidu's Xiaodu Zaijia are proving popular with consumers who are attracted by the combination of audio and visual stimulus and the wider range of use cases compared to speaker only devices."

Apple only shipped an estimated 1.6 million HomePods during the quarter, which at $350 each would translate into approximately $560 million in revenue, accounting for just 8% of the $7.3 billion in revenue that Apple recorded in its "Wearables, Home and Accessories" segment. The company is desperately trying to catch up with its tech giant peers, and has reportedly acquired voice app start-up Pullstring as part of that effort, according to Axios.

Amazon recently acquired Wi-Fi mesh networking company Eero as part of its broader smart-home strategy, which is built on its smart speaker leadership.