Here’s How A Smart Speaker Can Benefit Alibaba Over The Long Term

Alibaba (NYSE:BABA) recently announced that it is launching a smart home speaker, termed Tmall Genie, in August this year. The smart speaker market has been heating up of late, as Google and Apple are looking to compete with Amazon’s Echo in the segment. While these tech giants are primarily selling their smart home devices in the U.S. and Europe, Chinese search engine giant Baidu is also looking to foray into the segment of family robots and personal voice assistants. Baidu launched a voice controlled family robot called “Little Fish” in May this year, with which Alibaba’s device could potentially compete. While Little Fish is a robot and priced at $478, as opposed to Alibaba’s low cost speaker which will cost around $73 in the first month of release, Baidu is also likely to launch a personal voice assistant competing directly with Alibaba. Competition in this segment is intense in China, with Tencent also developing a voice activated digital speaker which is likely to be launched soon, while JD.com already has a smart speaker called LingLong DingDong which was one of the first entrants to the market. However, Alibaba has an advantage in terms of its 450 million strong e-commerce user base that might automatically prefer its home assistant. The device can make it more convenient for shoppers to transact on Alibaba’s platform, which could be an important driving factor for its sales. It can complement Alibaba’s e-commerce platform just as Amazon’s e-commerce business has benefited from Echo users.

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Capturing Growth In China’s Smart Home Market, International Potential

With a growing economy, increasing per capita income and a relatively young population, demand for smart home devices and personal assistants is likely to increase substantially in China over the next few years. According to a recent report, the smart home market in China is likely to reach $23 billion by 2018. International players such as Amazon, Google and Apple are not currently selling their smart home speakers in China, leading to competition only among local players. While customers can still source the products from overseas, expertise in Chinese languages and the ability to understand the several dialects will be a key differentiating feature for these products. Building a voice-based virtual assistant is fairly challenging in China, given the various dialects and accents associated with the language. Baidu holds an edge in this space with its focus on artificial intelligence. Baidu’s Deep Speech 2 has superior voice recognition abilities as it leverages machine learning to create a neural network. For Alibaba’s product to succeed, the company has to invest heavily in technology to be able to effectively compete with Baidu’s expertise.

While it is not currently clear whether Alibaba will launch its smart speaker outside of China, the company already has interest in other markets in Asia where the product can be launched in the future. Further, the company could also benefit by launching a low cost personal assistant in the U.S. and Europe as it looks for global expansion. The smart speaker market is growing exponentially, and in the next few years this product might become an essential household electronic item. Alibaba can leverage its deep pockets and technology to become a strong player in the segment.

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