Market Insight

Google Home Trumps Amazon Echo with Deeper Ecosystem, More Powerful Virtual Assistance, and Cheaper Price; Google Assistant Will Quickly Surpass Alexa with Mainstream Consumers

October 04, 2016  | Subscribers Only

Paul Erickson Paul Erickson Senior Analyst, Connected Home
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Today, Google announced the $129 Google Home connected speaker, a competitor to Amazon’s $149 Echo speaker and Alexa virtual assistant. It combines Google Cast audio compatibility with far-field voice recognition and always-on access to Google Assistant, the company’s successor to Google Now.

As a Wi-Fi connected speaker, Google Home can receive audio via Google Cast, features full-range drivers with dual passive radiators, has a capacitive control surface on top, and has six different options for its interchangeable bases. A multiple microphone array and far-field voice recognition allows users to initiate Google Assistant from across a room, via the familiar “Ok Google” phrase.

Our Analysis

Much like Amazon Echo, Google Home is less a story about a wireless speaker and more about a point of access to a virtual assistant. That said, ultimately it will be the virtual assistants that are the trump card, and Google Assistant is expected to only grow in superiority to Alexa, when it comes to personalization and everyday usefulness for mainstream users.

In terms of search and everyday queries, Google Assistant allows full access to Google’s leading capabilities in search, with intelligent recognition of unstructured queries.

For media playback, Google Assistant is able to control playback of audio and video to Google Cast, Chromecast, and Chromecast Audio devices from multiple music services, video from YouTube and soon Netflix, with more partners to come. Google Photos content can be shown as well, with full access to Google Photos image search capabilities.

For the smart home, Google Assistant will integrate with Nest, SmartThings, Philips Hue, and IFTTT, allowing a scale of smart home device access that rivals -- and is expected to exceed -- the inroads thus far made by Amazon’s Alexa.

In head-to-head capabilities in search, media playback, and the smart home, Google Home and Google Assistant enable a greater range of capabilities, compared to Amazon Echo and Alexa. However, the most significant gap is that Google offers a more “personal” level of virtual assistance – combining deep data-driven personalization with a better ability to handle everyday random unstructured queries.

Google’s investments in language recognition, machine learning, and artificial intelligence (AI) -- and its commitment to using Assistant as its interconnected, continuously personalized voice interface across all its platforms -- indicate that Google Assistant will be superior to Alexa in everyday presence and usefulness.

When it comes to tasks, scheduling, personalized information, and handling of impromptu, unstructured queries, Google Now is commonly considered superior to Alexa in everyday capability. Google Assistant is expected to maintain and increase this gap. As Google Assistant spreads across platforms, including the car, it will also potentially be present in more everyday places and situations.

Despite Amazon’s investments in AI, without Google’s scale-driven depth of user data across platforms and web services, it will never realistically be able to match Google in personalization capabilities.

In terms of connected speakers, Google Assistant is expected to grow beyond Home, with third parties such as Sonos and Google’s existing Google Cast audio partners likely to implement Google Assistant access -- to varying degrees -- over time. Google Assistant’s third-party audio implementation is expected to exceed Amazon’s capabilities, particularly as manufacturers consider the total available market that can be accessed by tapping into the Google and Android ecosystems.

In terms of third party support, Google’s presence, combined with Google Assistant’s open developer platform and the Embedded Google Assistant SDK, are expected to generate third party app and hardware integrations far beyond what Amazon has achieved with the Alexa Skills Kit.

Despite Amazon’s impressive growth in Alexa’s library of Skills, it will be everyday cross-platform presence and utility that will prove most sticky to consumers – and this is where Google Assistant will ultimately leave Alexa far behind.

Due to the newness of the market, and the price differential between Bluetooth speakers and full-featured Smart Speaker products such as Amazon’s Echo and Google Home, IHS Markit currently forecasts the Smart Speaker market conservatively at 1.3 million units shipping in 2016, rising to 9.7 million units in 2020.

The competition or rapid adoption of Google Assistant by third-party hardware partners could drive far-field enabled speakers well below $99 before holiday 2017. If that happens, growth will accelerate, as the prospect of multiple speakers per household becomes more affordable for mainstream consumers.

 

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