US Insights

Amazon, Apple and Google Battle to be the Voice of Your Home

Alvaro Morilla

Associate Analyst

Brands 06.09.2017 / 12:30


Voice search exceeds 10% of all search traffic.

Voice is the natural way for us to engage and communicate with the world. However, it was not too long ago that the prospect of devices able to resemble a natural conversation was dubious. As with many things in tech and eComerce, the pace of change is rapid in voice commerce. In 2014, voice search was negligible; today it exceeds 10% of all search traffic. When Amazon launched Echo in 2014, most, if they are honest, were skeptical, especially us retail analysts. If anyone was going to make the technology work, and drive adoption, it was Amazon.

The Natural Extension to Retail Ecosystem

It is estimated that by 2021, there will be 1.8 billion consumers using AI voice assistants globally. Amazon currently enjoys first-mover advantage, on which it is sure to build a formidable lead. This is thanks to developers and brands capitalizing on the power and supportive environment around Alexa Skills (the “mobile apps” for Alexa), which have grown more than 350% between Sept. 2015 and Nov. 2016, accounting for more than 13,000 skills. This is self-perpetuating, with others wanting to get in on the action of the future of user experiences.

Amazon Echo Installs

Hot on the heels of Amazon is Google. The tech giant’s ‘Google Home’ launched in November 2016, arriving in the UK in April 2017. Compared to Echo, success has been somewhat muted, but it is gaining traction. Retailers and brands are starting to take note, with Tesco following in the footsteps of US retailers Costco and Walgreens and integrating shopping options to the Google Home platform. We have gone from a test period for one device in 2014 to a diverse and competitive market of voice enabled devices. Competition is sure to heat up now that Apple's HomePod voice speaker has arrived.

Who is the New Kid on the Block?

Apple’s HomePod, available in December 2017, just in time for the holiday season, will be sold for $349 for users in the US, UK and Australia.

Powered by Siri and integrating the powerful “A8 chip”, the device combines Apple’s audio technology and software to deliver what Apple calls a high-fidelity sound with technology that grants the best quality voice speakers. 

The device will initially serve as a media and music center, as Amazon did with Alexa. With Siri already “an expert” in the field, when combined with Apple Music, the offer is compelling, and will surely appeal to Apple fans. In the words of Apple executive Phil Schiller: "Just like iPod reinvented music in our pockets HomePod is going to reinvent music in our home."

Apple is a master at maximizing its revenue per item. However, for HomePod to succeed, it won’t be able to rely on aesthetics, audio quality and seamless integration with other Apple products. It will help, but open sourcing its platform to developers will be essential if it is to complete with Amazon and Google.

May Battle Commence

Voice is now leading the retail debate. Amazon is moving fast, with Alexa continuing to expand its capabilities. Google is not willing to fall behind, bringing more developers on board to ramp up its voice. While HomePod is being aimed at home entertainment, Amazon is focusing efforts on different aspects of how it can utilize its advanced AI capabilities. While the original Echo was focused on media and music, the Echo Look is a fashion and shopping assistant, and the new jewel in the crown, Echo Show, is a Trojan horse to be engrained in our homes as a lifestyle aid including video calls. With Amazon entering more rooms of the home, we’d expect Apple to launch more devices tailored for specific functions.

Amazon Winning... For Now

For voice commerce, Amazon’s ecosystem is the clear leader. Google is fighting back with Google Express, partnering with established retailers. As for Apple, although not disclosed, this strategy will play an important part to integrate the device and Siri as an ecosystem.

While HomePod will become certainly a best-selling accessory for Apple this holiday season, Apple must move fast in an already competitive market. While Apple is traditionally not the fastest to market, their unique approach has marked a shift on those markets. For Google, the device will create new challenges for marketers on how their content is “read” by Google Home, but it serve collecting even more data.

At this stage it is not clear if shoppers will embrace Google’s experience given the polished Amazon ecosystem.  While Apple and Google might steal some share of the voice devices, Amazon’s ability to embed voice within its shopping ecosystem means it is sure to retain its lead in Voice Commerce. 

What the Future Holds 

Voice will gain traction, and Amazon is primed to capitalize, if not fuel the growth of voice commerce. Brands will need to reappraise relationships with Amazon and others as voice strengthens their role as consumer gatekeepers.

At Kantar Retail we see voice impacting the entire retail landscape, driving a major transformation in the way consumers engage with retailers and brands. This is the dawn of a new age of commerce, with all players just starting out on their journey. While voice is not going to replace our mobile phones and computers, it will enrich the possibilities for customers and create a new platform for brands. Collaboration and partnerships will be key to success, as will a willingness to dip your toes in the water.

Source: Kantar Retail

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