Baidu is Reshaping Smart Speaker and Voice Assistant Market Share in China

  • Baidu rose from a small smart speaker maker in Q2 2018 to the number two device seller globally in Q2 2019
  • The company’s market share by unit sales in China climbed from just 2% to nearly 40% in a single year
  • This rise in smart speaker sales has been accompanied by an expansion of Baidu’s DuerOS assistant into more than 400 million devices

Canalys recently reported on second-quarter global smart speaker sales and the Q2 list in 2019 differed noticeably from 2018. Most of the attention was focused on Google falling from the top seller of smart speakers a year ago to third this year with a resurgent Amazon taking the top spot as it had in some other recent quarters. However, the number two spot globally was assumed by Baidu, a company that commanded less than 1% sales share in Q2 2018.

Baidu Leaps to the Top in China

While there is technically a global market for smart speakers, from a practical perspective there is a market in China and another in the rest of the world. With the exception of Apple, none of the key non-Chinese smart speaker makers sell in China today and the presence of Chinese smart speakers outside the country is minimal. That means it is typically better to look at the markets separately.

You can see the China market share shake-up even more clearly when we remove the smart speaker makers outside of China. Baidu commanded 2% of Chinese smart speaker sales in Q2 2018 and nearly 40% in Q2 2019. That moved it from a distant third in smart speaker sales to the top spot surpassing Alibaba.

Alibaba and Xiomi together accounted for 94% of smart speaker sales in China in Q1 2018. By Q3 2018 that share of unit sales had fallen to 71%. In Q2 2019, the companies combined smart speaker sales amounted to just over 60%. You can see that a clear duopoly in 2018 quickly melted into a three-way race in just five quarters.

Keep in mind that there also were far fewer devices sold in 2017 and 2018 than are expected in 2019. Canalys estimates that there were only about 22 million smart speaker users in China at the end of 2018 and that the figure will rise to about 60 million in 2019. If Baidu controls 40% of 2019 smart speaker sales, its installed base at the end of the year could climb to over 25% of the entire China market, up from about 1% a year earlier. That will still trail Alibaba and Xaiomi, but shows a trendline that could help the Chinese search giant surpass its rivals in 2-3 years.

Beyond Smart Speakers

Smart speakers are just one front in the competition for voice assistant adoption among Chinese consumers. Alibaba has aggressively expanded its Tmall Genie assistant footprint into automobiles and we seeing voice assistants show up in a variety of consumer appliances and wearable devices such as smartwatches. The biggest device platform today for voice assistants is smartphones. In all of these surfaces beyond the smart speaker, Baidu appears to be dominating its rivals.

Earlier this year, Baidu revealed that its DuerOS assistant is now available on over 400 million devices. This figure represents how many devices enable user access to DuerOS and not actual usage which is surely far lower. However, distribution is a key success factor in growing a voice assistant user base and neither Alibaba nor Xiaomi have anywhere near the footprint Baidu is creating. Baidu is often referred to as the Google of China, but in reality, it is smaller than its key rivals Alibaba and Tencent. Despite its smaller size, the company has several assets in pushing DuerOS out to consumers and these may amount to a growing advantage in the race for voice assistant market share.

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