Google vs Amazon – Battle for the smart home pt XI

Google still has the edge.

• The latest data shows that Amazon remains ahead in terms of users, but Google is closing the gap when it comes to shipments and is still far superior when it comes to performance and overall usage.
• Data from Voicebot.ai (see here) suggests that despite losing share in shipments, Amazon remains well ahead in terms of users with 64.6% share of all smart speakers deployed in USA.
• Google is second on 19.6% with Apple making a little headway with 4.5% of the installed base.
• In terms of shipments, there remains significant disagreement between research commentators.
• Strategy Analytics has the global sell-in market at 11.7m units while Canalys estimates the same market shipped 16.8m units in Q2 18.
• A good part of that disagreement can be found at Google where Strategy Analytics estimates that Google sold 3.2m units while Canalys estimates that it sold 5.4m units during Q2 18.
• Inventory adjustments cannot account for the difference as both firms are measuring shipments from the factory into the channel.
• Hence, it is impossible to tell where the discrepancy lies but given, voicebot.ai’s installed base data, I would be inclined to side with Strategy Analytics.
• Amazon has clearly exercised its first mover advantage and distribution channel to great effect, but I think that Google still has the edge for two reasons.
  • First, performance: Google Assistant is by far the best digital assistant available today and all of the tests that are run clearly point to this.
  • The latest example is data from a test lab called Vocalise.ai (see here) which measured the ability of different digital assistants to understand non-native English speakers making requests in accented English.
  • Here Google consistently outperformed the others and the contrast was particularly marked when tested with an accent from China.
  • This is yet another example of how Google uses its superior AI to produce a product with better performance.
  • Second, traffic: Although Amazon still has by far the largest share of smart speakers, only a relatively small percentage of total requests are made using a speaker.
  • The vast majority are made using a smartphone where Google is native to around half in the US and 80% worldwide (ex-China).
  • This means even accounting for Apple’s strong presence in the home market, Google is still generating far more requests via its assistant than Amazon is.
  • This means that it should be able to improve its assistant more quickly, as one of the keys to improving an assistant is the amount of data gathered from requests being made.
• Consequently, my position on the digital assistants remains unchanged:
• I still think that Google Assistant will win the battle for the smart home (see here), leaving Amazon with the shopping piece as this is a functionality that Google is unlikely to ever match.
• I am warming up to Google once again mainly because it is likely to escape the most unscathed from the current privacy-related backlash and hence should outperform its peers.
• That being said, privacy advocate Apple is likely to fare the best of all while the current storm rages.