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Trendforce Says Amazon Smart Speaker Market Share to Fall to 51% in 2018, Apple HomePod to Rise to 9%

Analyst Tom Tien at Taiwan-based TrendForce estimates that Amazon and Google commanded 87.2% of global smart speaker market share in 2017 followed by Alibaba and Xiaomi at 4% and 3% respectively. How does this compare to other analyst estimates for 2017 smart speaker market share? It assigns more volume to China and less volume overall.

TrendForce wouldn’t share their total numbers, but we can anchor on the one data point that has been publicly announced. Alibaba said in early January that it sold 1 million Tmall Genie smart speakers in 2017. Using that as a baseline, TrendForce’s total global smart speaker sales for 2017 would be 25 million. That is close to what Strategy Analytics had originally forecast. However, Q4 sales were so strong that Strategy Analytics raised 2017 global smart speaker sales estimates to 30.9 million units. That results in a 25% difference and suggests that TrendForce’s estimates are conservative.

A place where TrendForce and Strategy Analytics are very close is in Amazon Echo shipments. Based on the data, it looks like TrendForce says Amazon shipped about 17.3 million Echo devices while Strategy Analytics puts the figure at about 18.3 million. However, a key difference is in Google Home device shipments. It appears Strategy Analytics believes 87% more Google Home’s were sold than TrendForce estimates. Based on public comments from Google, Voicebot analysis suggests Strategy Analytics number is too low so this is key area where TrendForce may have underestimated unit sales.

Other Smart Speaker Market Share was 13-14%

Another difference is that TrendForce estimates that Amazon’s market share is about 9% higher than Strategy Analytics and that Google’s market share is 9% lower. That is a big difference which accounts for the disparity in unit volume mentioned above. However, it also points to a similarity. The analysts virtually agree on the non-Amazon, non-Google market share. TrendForce puts that at 12.8% and Strategy Analytics at 13.5%.

Within the non-Amazon, non-Google category, TrendForce places Alibaba with 4% smart speaker market share compared to Strategy Analytics at 1.62%. However, Strategy Analytics didn’t use 1 million as Alibaba’s unit sales. Its lead analyst assumed 500,000 units. If further investigation confirms the higher Alibaba sales figure, then it would rise to 3.2% total share for Strategy Analytics. That is converging on TrendForce’s 4% estimate.

Amazon Smart Speaker Market Share to Fall to 51%

The more striking estimate by TrendForce is that Amazon’s smart speaker market share will fall to 51% in 2018 while Google’s will rise to 21.6%, Alibaba to 6.3%, Xiaomi to 5.1% and others to 7.4%. Adding to that total for Amazon competitors is an expected surge in Apple HomePod market share to 8.9%. That figure would fit nicely with Strategy Analytics forecast of 3.8 million HomePods sold in 2018 assuming a 50% rise in total global smart speaker sales. The more aggressive 7 million HomePod unit sales forecast by Loup Ventures would require total smart speaker sales to more than double in 2018.

It truly would be important news if Apple HomePod were to capture nearly 9% market share in its first year of shipments. However, the more striking finding is that TrendForce estimates that every smart speaker manufacturer will grow market share entirely at the expense of Amazon Echo. Tien’s hypothesis is that everyone’s share will increase while Amazon sheds over 18% in gross market share. That is a 26% drop on a relative basis.

Understanding the Strengths of Various Analyst Forecasts

Should we believe the TrendForce estimate? Here is why we should give it some weight. Although it appears the estimates for total shipments in 2017 may be low, TrendForce is well connected in the semi-conductor and Chinese electronics manufacturing sectors. This might offer additional insight into unit volume estimates based on component supplier and contract manufacturer output. And, it may be particularly true for unit volume for smart speakers sold into the Chinese market. If you keep the Chinese unit volume estimate and add back higher sales from Amazon and Google, there would be fairly clear alignment with Strategy Analytics.

What we are all likely doing is underestimating sales volume that will come in China in 2018 and overestimating Amazon’s ability to maintain market share. TrendForce provides a good counter-balance to the western analysts in both cases. Because of strong segment growth and expansion to new countries, Amazon is likely to sell more Echo devices even while its market share falls. Everyone else is almost guaranteed to sell more devices because they are all, with the exception of Google, starting from a small base.

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