Q1 Smart Speakers Fell 5% on Chip Shortages, Market Saturation: SA
The global smart speaker and display market declined 5% to 35.3 million shipments in Q1, hit by component shortages, the war in Ukraine and a resurgence of COVID-19 in China, Strategy Analytics reported Monday. It was only the second year-on-year…
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decline in the category’s history. SA forecasts a “market reset” led by two market dynamics, said analyst Jack Narcotta: approaching market saturation for smart speakers and smart displays and a shift from customer acquisition to add-on or replacement sales, “which historically have longer sales cycles.” In China, sales of smart displays fell 7% year on year to 9.9 million units, with Chinese vendors Alibaba, Baidu and Xiaomi “only beginning to deal with a set of challenges unique to them" that will alter the course of their respective smart speaker and smart display businesses through 2023, SA said. Slowing the surge of COVID-19 in China will take time, and compounded by the ongoing component shortage, economic recovery “will be hampered until at least mid-2023,” SA said. Basic smart speaker sales slipped about 4% in the U.S., where 19 of the top 50 smart speaker products sold in Q1 had displays, led by Amazon Echo Show 5 with 1.6 million shipments. Apple’s HomePod mini had the most growth in the quarter at about 30% to 4.5 million shipments. Amazon and Google are rapidly entering their “adult” years, as most consumers that wanted an Echo or Nest device have likely purchased at least one, said analyst David Watkins. Amazon and Google need to adjust their business models to “upselling additional devices to consumers or encouraging them to update older models," he said.