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Baidu’s Xiaodu Smart Device and Voice Assistant Business Closes Funding Round to Reach $5.1B Valuation

Xiaodu, the Baidu brand behind its DuerOS voice AI and smart device products, has closed an undisclosed Series B funding round, bringing its valuation to $5.1 billion. The funding comes not long after a November Series A round which saw Xiaodu’s value rise to $2.9 billion.

Xiaodu Value

Xiaodu combines the hardware of smart speakers and smart home devices with DuerOS, which powers the company’s Xiaodu voice assistant. The company’s range of devices and voice AI features has expanded at a steady clip for the last few years, including new earbuds, smart displays, and smart televisions, The software underwent a major upgrade to DuerOS 6.0 last fall as well. The improved platform added support for low-power voice chips, better sound amplification software and natural language understanding, reducing errors by 46%, according to the company. The likely enormous investment and the subsequent spike in Xiaodu’s valuation are also likely fueled by the company’s userbase expansion. Baidu hasn’t updated its numbers in some time but reported more than 500 million devices using DuerOS in 2019 and with 6.5 billion queries to the voice assistant in March of 2020. A deal with Midea, China’s largest smart device manufacturer, to allow Xiaodu’s smart speakers to control Midea’s more than 70 million appliances, has undoubtedly only upped those numbers even more, though the company noted that smart displays are where it is leading in shipments.

“We are pleased to see the rapid growth of Xiaodu, leveraging Baidu’s AI and large content and services mobile ecosystem, to change the way hardware provides value for consumers,” Baidu CFO Herman Yu said in a statement. ” Xiaodu entered the market in 2018 with sub RMB 100 smart speakers and rapidly became the world’s largest smart-display provider based on shipments.”

Service Shift

Xiaodu’s work since the funding last year has included plenty of updated hardware and new creations like the recent Xiaodu Intelligent Dictionary Pen. Still, as the hardware built by Baidu and its partners becomes more ubiquitous, it’s the apps and services side of things that are starting to pick up more of a share of the company’s revenue.

“DuerOS with voice modality and larger screen is growing Internet usage at home and becoming the command center for IoTs, with its fast growth of OEM partnerships,” Yu said. “Services revenue surpassed 10% of Xiaodu revenues in the most recent quarter, encompassing membership, advertising and skills store revenue share.”

We’ve reached out to Xiaodu for more information about the kinds of services leading the shift in revenue share and how the new funding will be applied. We will update this post as we learn more.


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