Voice and the Consumer Markets: Accelerated Growth

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Voice control and voice-based technologies have experienced massive growth in the past five years within the consumer market. Due to their accelerated growth and consumer interest, the voice-first landscape is rapidly changing and influencing the adoption of voice-enabled products.

Market leaders such as Amazon, Google, Apple, Microsoft, and most recently Samsung continue to announce new product enhancements and expanded roadmaps, all competing to stay strategically ahead in the race for dominance in the voice-first market.  Collectively, companies regularly announce new integrations and partnerships to create new voice-based use cases, as stakeholders vie to leverage the current market’s momentum to enable a robust user experience.

Consumer Adoption and Use

Consumers have been relatively quick to embrace voice-based applications, especially considering early experiences with voice technology, such as automated toll-free phone systems, were not particularly user friendly. These infamous systems often re-routed frustrated consumers several times before reaching the correct service option or individual.

The novelty of the consumer experience with intelligent personal assistants (IPAs), led by Apple’s Siri, launched a new phase in voice.

Parks Associates research in 2012 found more than 50% of U.S. users of Apple iPhone 4S were “very satisfied” with the Siri voice-command feature. Even at that early stage, nearly 40% of Apple iPhone 4S users expressed an interest in Siri-style voice command for their TV.

These experiences set the foundation for the next phase in the voice race and the expansion of intelligent personal assistant offerings. In 2014, Amazon accelerated the market and intensified consumer appeal with its Amazon Echo device and Alexa solution. In particular, the firm garnered significant attention at CES both in 2016 and 2017 with numerous companies unveiling products embedded with or integrating Alexa. It succeeded early in catering to and targeting customers with its marketing initiatives, channel strategies, and solutions that provided the convenience in voice assistance and the multifunctional ability to perform various tasks.

Other firms have stepped up to challenge Amazon with their own product iterations. Trends in the voice-first space have far-reaching implications for a variety of areas. While voice-based assistants are generally tied to a particular smartphone OS, voice interfaces have the potential to help simplify the consumer experience across a number of different product and service categories.

Market Shift Factors

A number of factors will drive the voice-first market in a variety of industry areas, and company responses will determine accelerations in adoption and sales as well as successes and failures among both established players and new entrants.

Consumer experience with first-generation devices

There is still a sizeable portion of U.S. consumers who have not used voice-based interfaces or don’t use them regularly. Their initial interactions could come from any number of industries—a voice-based remote control from their pay-TV provider, a voice-based health app recommended by their doctor—and their experiences with these devices will largely determine their perceptions and future use of voice-based solutions. Also, as these are the middle and late adopters, on the other side of the chasm, they will have much less tolerance for errors, and will be quicker to abandon voice options, than the early adopters.

UX is particularly important in the CE market, where repeat brand purchases are the norm. First-generation devices often have to tackle product issues from the introduction of new technology.

Fifty-four percent of consumers will buy another product of the same brand if no problems occur with the current device or service. Only 31% of product owners who experience two or more problems will buy another product of the same brand.

Companies must balance the race to establish early market share with the danger of prematurely releasing a voice-enabled device or application that is riddled with software issues. Samsung’s delay of Bixby on Galaxy S8 smartphones reiterates the challenge in launching a sophisticated voice-first application. This delay was crucial for Bixby—not only did Samsung roll out the Galaxy S8 without Bixby but the rival Google Assistant taking its place. The smartphone initially offered features of Bixby but no voice command capabilities. In mid-July, Samsung finally rolled out Bixby, allowing users to access the intelligent assistant via a dedicated button on the side of the S8 phone—a button only meant for calling upon Bixby.

PARKS ASSOCIATES RESEARCH

  • 53% of owners of smart speakers with personal assistants report having a smart home device, compared to 16% of consumers without these voice-based devices who own a smart home device.
  • At the end of 2016, 45% of U.S. broadband households used a voice-enabled personal assistant through an application or dedicated device.
  • At the end of 2015, adoption of smart speakers with personal assistants was 5%. Parks Associates estimates that by the end of 2016, 10-11% of U.S. broadband households owned such a device.
  • Parks Associates estimates 2016 sales for smart speakers with personal assistant totaled 14 million units.

However, a delayed, competitive and market-ready launch of Bixby is better than one that falls short of its competitors, even if it means losing valuable time with consumers.

Amazon Echo devices and Google Home have proven the appeal in voice assistant devices with their rapid success. Due to market reception, Amazon has already introduced its second- and third-generation devices with the Echo Tap and Echo Dot, followed by the Echo Look and Echo Show. Recognizing the limitations that a voice-only interface brings and learning from consumers’ experiences with their first form factors, it launched the Echo Show—an Echo with a screen. This changes the game and may end the current market iterations of Echo-like devices from other competitors if they are unable to compete.

Google is reportedly in development on its next-generation Home device. Incorporating learnings from its initial product launch, Google has added the ability to recognize up to six different voices. Apple introduced its much anticipated smart speaker, HomePod, at its WWDC. Considering these significant moves and upgrades to these voice-first devices, new entrants will undoubtedly be playing catch-up but can also learn valuable lessons from first-movers’ rollouts, design flaws, and user feedback.

Extending the Experience in the Home

Devices like the Amazon Dot have allowed for portability and the extension of voice assistants to multi-room experiences. Smaller form factors and lower price points entice consumers to add additional devices throughout the home.

Amazon’s Echo Spatial Perception (ESP) update illustrates the company’s expectation that its customers will build their home ecosystem beyond just one smart speaker. With ESP, Amazon has programmed its Echo devices to respond to a user’s command only from the speaker that is closest to the user.

Parks Associates finds over one-fourth of owners of smart speakers with voice-enabled personal assistant use two or more devices in their household.

The impact of additional purchases on the growth and potential of this market is dramatic. If consumers embrace a multi-room voice-first approach, the projections of unit sales for this category would increase multifold, creating new opportunities for CE makers to establish an ecosystem of products that drives consumers, through an exponential increase in value propositions, to purchase multiple devices of the same brand.

New Entrants and Increased Sales

Whether integrating products with current market voice assistants or creating their own proprietary solutions, companies are entering the competitive fold seeking to capitalize on this momentum.

Those that have integrated their products or services with third-party voice assistants have seen their efforts rewarded. For example, Linkplay, a comprehensive audio solution provider, has integrated its speakers with Alexa and has found a 50-60% increase in sales from doing so.

New entrants expand the product offerings available to consumers, can fill potential gaps in current market offerings, and can push the adoption curve further by approaching consumers’ needs in a different way.

Furthermore, industry giants who enter the market, such as Samsung, will be able to leverage their existing customer base. Consumers are inclined to use the voice assistant that is provided with the device they are using.

Expanding Partnerships and New Use Cases

Partnerships will lead to greater adoption by expanding the reach and utility of voice assistant devices.

Following announcements at I/O 2017, Google Home now has more than 70 different smart home partners. Amazon Alexa currently has more than 500 smart home-related skills.

As partnerships grow and the list of compatible products expands, voice assistant devices will increase in the potential value propositions they are able to offer. Allowing third-party manufacturers to integrate voice assistants into their product designs pushes adoption beyond the form factor of a smart speaker. From categories such as the connected car to those in the home such as connected appliances, consumers will be able to use voice commands to interact with their devices.

Use in the connected car in particular will be a strong growth area, as this use case has public and safety benefits beyond individual convenience.

Consumers routinely perform activities in the car that are dangerous—77% send or receive texts while driving.

The arrival and growth of voice control have catalyzed a major market transformation in both the UX and UI for a variety of devices. As devices continue to add listening capabilities, voice control will extend throughout the home and in other connected devices as an intrinsic, easy, and natural way to facilitate smart home management. It is in the smart home where voice interfaces will be able to demonstrate their full potential. Voice serves as a key interface to alleviate the complexity in fragmentation typical of the smart home market (and which will likely persist for the foreseeable future).

Our recent research addresses consumer demand for voice enabled personal assistants and the impact on the smart home markets. More information at www.parksassociates.com/report/voice-assistants.

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