Google Struggled to Sell Smart Speakers in Q3, But Amazon Killed It

Tech analysis firm Canalys says a comeback is possible in Q4

Amazon Echo, Google Home
Amazon continues to dominate the smart speaker market.
Amazon, Google

Amazon shipped more than 10 million smart speakers in Q3 2019—10.4 million to be exact—marking nearly 66% annual growth and making Amazon, once again, the top manufacturer of smart speakers worldwide.

Ecommerce platform Alibaba came closest with 3.9 million units in the quarter, followed by Chinese search engine Baidu with 3.7 million, Google with 3.5 million and Chinese consumer electronics company Xiaomi with 3.4 million.

That’s according to figures from tech analytics firm Canalys, which also found most manufacturers saw huge growth in the quarter—particularly newcomer Baidu with a 290% year-on-year boost. Google is the sole exception, which posted just 40% annual growth, which speaks to the efficacy (or, lack thereof) of the search giant’s twoyearlong “Make Google Do It” advertising and marketing campaign.

Canalys found that Alibaba regained the top spot in China from Baidu, which put it at No. 2 globally. In Q2 2018, Alibaba had more than 50% of market share in China with 3 million of its Tmall Genie speakers sold. That’s about when Baidu’s Xiaodu smart device came out, so it was not yet on the list.

Canalys attributed Amazon’s Q3 win to “a stellar Prime Day performance, closely followed by strong back-to-school and off-to-college shopping campaigns.”

Indeed, Amazon said Prime Day 2019 was “the biggest event ever for Amazon devices, when comparing two-day periods,” although it did not share specific sales figures.

In addition, Jason Low, senior analyst at Canalys, said Amazon introduced an Echo Upgrade Program to entice users to trade in old Echo or non-Echo Bluetooth speakers to further increase Echo device penetration in households.

Amazon also benefited from increased consumer interest in smart displays, which grew 500% globally to 6.3 million units in the quarter.

“The Echo Show 5 smart display contributed significantly to Amazon’s success in Q3, making up 16% of Amazon’s overall global shipments, and it became the best-shipping smart display of all the brands,” said Canalys research analyst Cynthia Chen in a release.

But, Chen warned, consumer price sensitivity and pragmatic use cases remain challenges for smart display manufacturers moving forward.

In fact, part of the reason Google struggled in Q3 was because Amazon’s Echo Show 5 “did tremendously well” and is competing directly against Google’s Nest Hub, Low said.

What’s more, he noted that Amazon’s Echo deals are getting more appealing.

“The challenging retail environment and shipment decline compelled Google to seek more partnerships, such as with Spotify, to drive sales through different channels,” Low said. “We are also seeing similar collaboration trends in China, where Alibaba leveraged its retail relationship and channel capabilities to run smart speaker collaborations with brands such as Starbucks, Budweiser, Abbott and Oreo, among other local and international companies. This has largely increased the consumer appeal of Tmall Genie devices.”

But Low is optimistic for Google in Q4, when its updated Nest Mini device will start shipping and it will introduce that device, along with the Nest Hub, to additional countries including Brazil, Belgium and Taiwan.

Meanwhile, consumers are learning to wait for promotions and deals, which makes retail challenging for smart device brands. But, with Black Friday, Cyber Monday and holiday shopping coming up in Q4, Canalys expects to see “a heated battlefield for smart speaker players.”

The good news for Google: “Its new devices should be in time to take advantage of that,” Low said.

The bad news for Google: “Amazon will also be releasing some of its latest devices, such as the Echo Dot with clock,” he added.

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