Alexa once again appeared in the limelight in a SXSW panel discussion this year. The topic was about how AI tech needs to be designed with children’s wellbeing in mind, but the element that struck me once again was that, years after Alexa first came into our lives, she is still being used as a proxy for smart speakers.

Smart speakers are continuing to drive healthy growth in the home audio category (and more broadly, Smart Home category) with Statista forecasting a doubling of unit shipments worldwide between now and 2025, and in 2019 SXSW recognised smart speakers as one of the fastest tech adoption rates in history. The adoption rate of the tech is not only extremely fast, but there's years of growth still to come. A pretty healthy category then. But is it only a small number of brands benefitting?

As an established brand in the home audio category, you can’t help but be a bit nervous. The tech giants such as Amazon, Apple, and Google can offer a triple threat of easy access to music streaming platforms, integrated AI assistant software, and good (fine) speaker quality. And all for a reasonable price. So where does that leave the home audio incumbents such as Sonos, Bose, Sony, and even smaller contenders such as Roberts and Ultimate Ears. Are they about to be booted out of their territory and replaced with the ‘cover all the bases’ likes of Amazon Echos and HomePods?

In all honesty, the likelihood is that these tech giants will indeed pull off a pincer movement, and the market will see a reckoning. The camera category went through a similar phase. There was fast growth as high-quality photography became amateurised and the rise of social media gave people a purpose for taking great photos. In comes Apple with great quality cameras built into their iPhones; who needs a chunky camera when you have a smartphone? The incumbents such as Nikon suffered.

Unless the Home Audio incumbent brands carve out a space for themselves in the market that delivers against something the big tech brands can’t, then they may well be culled.

But (leaving the doom and gloom behind) we’re not at that point yet! While the adoption rate is still healthy and the home audio market is continuing to grow, now is the opportunity for audio brands to carve out their space in the market, defend their territory, and even lay claim to a portion of what is a growing and essential tech category.

Focusing on speaker quality and specs will, frankly, be a race to the bottom against the tech giants. And trying to offer another AI assistant may complicate rather than simplify people’s lives. So for these brands it may be about finding the occasions and needs that give them an edge: Alexa can’t actually be everything all at once.

Relaxing on a Friday night and listening to music with a glass of wine is a very different occasion compared to putting on background music while cooking. For the latter there is a need for ease and accessibility, while for the former there is a need for detail, quality, everyday luxury and ‘experience’. It’s a similar story if you think about watching a film at home but with cinematic quality: you need impactful audio with depth, not a Google Nest.

These are simply first thoughts on how different occasions can be a route to justifying a more premium offer and providing a means to carve out a more ownable space in the market. The home audio category has the potential to be a more nuanced market space with opportunities for premium offers and propositions.

But the groundwork needs laying now, while the category is still strong, healthy and growing.

Categories: Tech & Content

BY ENGINEER Rachel Ballard

rachel.ballard@thevalueengineers.com