Amazon Dominating Google in the Voice-Activated Speaker Race

(Bloomberg) -- Amazon.com Inc. will dominate Google in the voice-activated speaker market for the next few years due to the early breakout success of its Echo speaker, according to a forecast from research firm EMarketer Inc.

More than 35 million Americans will speak to these internet-connected speakers at least once a month this year, more than double the number in 2016, with tech-savvy millennials leading adoption, the EMarketer said in its first forecast of the burgeoning market. About 71 percent will use Echo devices, with the Google Home speaker trailing at 24 percent.

Amazon will remain the dominant player for the next couple of years, even as Google narrows the gap, because it got such an early lead, EMarketer analyst Martin Utreras said.

"Consumers are becoming increasingly comfortable with the technology, which is driving engagement,” he added. “As prices decrease and functionality increases, consumers are finding more reasons to increase adoption."

Indeed, a separate study released Monday shows Amazon's $50 Echo Dot, the cheapest version of the speaker, is helping boost adoption. The low-cost Dot, which Amazon introduced last year, is enticing consumers to try the technology. The model represents more than half of the 10.7 million Echo devices sold since they were introduced, according to a report by Consumer Intelligence Research Partners.

“The Echo Dot definitely helped drive Echo sales since the release of the second generation model in October 2016,” said Josh Lowitz, co-founder of the research firm. “Amazon priced it aggressively, offered big discounts during the holiday season, and offered promotions for purchasing multiple units to encourage gifting and multi-room home use.”

Amazon unveiled the Echo, a cylindrical speaker that lets users stream music, dim lights, and order pizza by voice, in 2014. The devices cost as much as $200 and have become a surprise hit for a company that had struggled with some of its other consumer hardware efforts. Alphabet Inc.'s Google answered with its $115 Home device two years later. The gadgets target the house, when people might not have a smartphone handy and where portability isn't an issue. Voice-based assistants, such as Apple Inc.'s Siri, are commonly accessed via smartphones.

Amazon will "double down" on its investments in Echo devices and the underlying Alexa voice-activated system this year, CFO Brian Olsavsky said on a recent earnings call.

The company in April announced the latest Echo variation, called the Echo Look, a $200 hands-free camera designed for dressing rooms that takes photos and video on voice command so users can assess their outfits from every angle. The device also lets users submit photos of two outfits to get a recommendation on the best one. The company will soon unveil a new Echo that features a display.

To contact the reporter on this story: Spencer Soper in Seattle at ssoper@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Alistair Barr, Andrew Pollack