Dating back to the time before 2016, the smart home market had grown to a certain scale, while the number of startups increased and more pioneering gadgets were introduced.
In the past year, however, the flow of the game changed and the market was controlled by existing tech giants like Amazon and Google. Amazon acquired smart doorbell maker Ring and security camera team Blink, while becoming one of the main investors in smart thermostat startup Ecobee.
Google brought Nest back under its umbrella. The thermostat company spun out as an independent company in 2015, and did not release groundbreaking products since then, except a security camera thanks to its acquisition of DropCam. Google bought Nest in 2014 for US$3.2 billion.
Smart lock maker August Home was acquired by over-100-year Swedish door lock maker Assa Abloy, which also owns the door lock brand Yale.
Small companies are joining bigger corporates which have more resources and capital to tackle the consumer market. And the turning point in the smart home industry is the launch of Amazon Echo.
Amazon Alexa – a surprise hit
Launched first in November 2014, Amazon Echo became generally available to all consumers in June 2015, and picked up its momentum in 2016.
Amazon Echo showed up in one of the Super Bowl ads, Alexa became a well-known term and an affordable Echo Dot was released in that year. According to the Consumer Intelligence Research Partners (CIRP), two million of Echo units were sold in the first nine months of 2016.
The Echo devices had a really great year in 2017 – Amazon launched 2nd-generation Echo, introduced the Echo Show and Echo Spot that feature a screen and cut down the Echo price from US$180 to US$100, making much more affordable.
By the end of the year, CIRP estimated that Amazon have sold 30 million units of smart speakers in the U.S., taking around 69% market share.
Amazon Echo with its built-in smart assistant, Alexa, brings music, information search and the ability to control various smart home devices to modern homes. It has boosted the smart home market because the single speaker and Alexa have connected various home gadgets, which were very apart from each other.
Before, almost each smart home device came with its own mobile app. It’s great to remotely control home devices from apps, but homeowners were asked to install too many different kind of apps for their smart homes.
Then smart home hubs like SmartThings and Wink showed up and tried to gather various gadgets together. Amazon Echo served also as a smart home hub, but its voice capability helped it take off the market. Talking to an assistant and controlling home gadgets hands-free – that’s a picture of smart homes in the modern age.
Seeing the popularity of Amazon Alexa and Echo devices, Google introduced its smart speaker Google Home in late 2016. According to CIRP, Google had about 30% share in the smart speaker market by the end of 2017.
An ecosystem battle
To develop AI voice assistants and its broader applications require a great amount of capital to achieve. That’s why tech giants hold the power in the smart home market instead of pioneering startups.
Their AI-powered smart speakers are also shaping the industry into an ecosystem battle now.
Smart home hubs like Echo or Google Home create smart home ecosystem at the same time, whether homeowners’ smart lock and camera works with Alexa or Google.
Meanwhile, not every homeowner needs a smart speaker. Thermostats or security cameras are much more common home gadgets than a smart speaker.
Therefore, smart speaker makers are now making and buying other home devices to lure consumers into their ecosystems. That’s also why Amazon bought Ring and Google took Nest back.
They are establishing a home ecosystem surrounded by gadgets natively supported by Alexa or Google, and the voice assistant sits in the center as a control helper.
The battle between Amazon and Google is firing up. Google refused to launch YouTube service on the Echo Show while Amazon decided not to sell any products from Nest or Google smart speakers on its e-commerce platform.
For those smart home companies who try to stay independent, supporting technologies from ecosystem giants might be the best solution – no matter which assistant end-users prefer.