Smart Speaker Sales to Approach $12 Billion This Year and Reach $28 Billion in 2022
- Manufacturer revenue from global smart speaker sales will be $11.8 billion in 2018 and grow to $27.8 billion in 2022
- Smart speaker sales will grow faster than the overall smart home market, but will still be a distant second to the video entertainment category in terms of total revenue
- Smart speaker growth rates are the result of strong consumer interest combined with fierce competition among Amazon, Google and Apple that includes heavy advertising
Research firm IDC forecasts that smart speaker manufacturers will rake in $11.8 billion in revenue in 2018 and that number will grow at a compound annual rate (CAGR) of 23.7% to reach $27.8 billion by 2022. That will result in a rise of $16 billion in annual revenue over the period. The data come from IDC’s most recent quarterly Worldwide Smart Home Device Tracker. Results of the analysis show the entire smart home device market growing from $206.8 billion today to $297.5 billion in 2022. The overall smart home market growth rate will show a 9.5% CAGR.
Smart Speakers Are Already Big in Smart Home, But Not The Biggest
Smart speakers are neither the fastest growing smart home segment nor are they anywhere near the largest. Both thermostat and lighting are expected to have faster growth rates over the next five years although from a much smaller base. Combined, the two categories will still be less than half of smart speaker revenue which currently stands as the second largest category. The largest category by far is video entertainment at $157.4 billion in 2018. This is predominantly smart TVs and other entertainment devices. Segment growth is expected to be 5.1% CAGR to a total of $192.1 billion in 2022.
Smart Speakers Rising in Smart Home Device Share
Because of the category size and growth rate, smart speakers are also going to rise significantly in terms of share of smart home device revenue. Starting at 5.7% of all smart home device spending in 2018, smart speaker share of category revenue will rise to 9.3% in 2022. IDC senior research analyst Adam Wright says much of that growth will be fueled by competition and advertising.
The race for dominance in the smart speaker segment is becoming fierce.
“The race for dominance in the smart speaker segment is becoming fierce. Smart speakers are one of the primary modes of access to a smart assistant, and consumer awareness and adoption of these devices and platforms is increasing rapidly thanks in large part to extensive marketing campaigns by Amazon, Google, and Apple. Amazon’s portfolio of Alexa-enabled speakers continues to represent the lion’s share of the market, but Google is gaining momentum and showing signs of closing the gap rather quickly. Apple, on the other hand, is struggling to get out of the gate with sluggish HomePod sales and shipments – in part due to the device’s high price point and Siri’s inferior performance as a smart assistant platform compared to Alexa and Google Assistant.”
All of these points will be familiar to regular Voicebot readers. Voicebot was first to report about Google’s rapid rise in smart speaker market share and Apple’s lackluster debut of 4.1% share. The rise of smart speakers to nearly $30 billion in annual revenue is significant, but keep in mind that smartphones generated $479 billion in 2017. Smart speakers will remain a peripheral market for some time to come.