Smart speakers continue to enjoy growth, despite the macroeconomic impacts of the COVID-19 pandemic, and that growth is expected to continue in the years ahead. Total unit volumes are expected to be approximately 135 million in 2020, according to recent estimates from market researcher Canalys. That's up from 125 million in 2019.

The market is then expected to accelerate in 2021, jumping by 21% to reach 163 million. Here's what investors need to know.

New Echo on a side table

Amazon's new Echo. Image source: Amazon.

The installed base could reach 640 million within a few years

Amazon.com (NASDAQ:AMZN) continues to be the dominant player with its Alexa-powered lineup of Echo devices, with Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google maintaining its No. 2 position. Apple (NASDAQ:AAPL) is lagging by a significant margin, but the Cupertino tech giant is hoping that its new $99 HomePod Mini will sell better than the larger variant.

"Amazon and Google are striving to spark interest by breaking the speaker mould, each taking different design routes aimed to obtain sound quality improvements, not only with physical design changes, but also introducing additional elements of computational audio," Canalys research manager Jason Low commented in a release. "In the future, a customer's listening experience will be increasingly adaptable and driven by AI [artificial intelligence]."

HomePod Mini on a kitchen table, with two children writing on the table as their father prepares dinner in the background.

The HomePod Mini is more competitive than the original version. Image source: Apple.

Alexa and Google Assistant are widely considered to be more intelligent and capable than Apple's Siri, Low notes, so the Mac maker "still has much to prove." Of those three tech juggernauts, only Apple sells smart speakers in China, which is an extremely important geography for the smart-speaker market. China will lead in terms of growth this year, increasing 16%, as the Middle Kingdom has mostly beaten the coronavirus.

The Chinese smart-speaker market is dominated by local vendors like Alibaba, Baidu, and Xiaomi, which sell low-cost devices. At roughly 700 yuan, the HomePod Mini will be positioned at a significant premium compared to competing products. Still, Apple has a large user base in China that the new smart speaker might appeal to, thanks to the company's broader ecosystem.

The 2020 holiday-shopping season is going to be a crucial time for the market, especially since the U.S. is still grappling with the pandemic. Amazon and Google recently revamped their respective lineups, including flagship products at the $100 price point. Amazon adopted a new spherical design in its latest Echo, and Google just released a new Nest Audio speaker.

Looking farther out, the global smart-speaker installed base is expected to double over the next few years, growing from 320 million in 2020 to 640 million by 2024.

"It is crucial for ecosystem partners to pay close attention to what platform vendors achieve, while having a keen sense to uncover new use cases as users shift habits amid the ongoing pandemic," according to Low.

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