From the sounds of it, earbuds have become the newest device battleground.
In the last two weeks, both Amazon (AMZN) - Get Report and Microsoft (MSFT) - Get Report have introduced new wireless earbuds, and Google (GOOGL) - Get Report is expected to do the same with a forthcoming refresh of its Pixel Buds. The first two will go on sale in the next few weeks, and Google is rumored to be announcing its own entry, updated Pixel Buds, at an Oct. 15 hardware event.
Wireless earbuds, or "hearables," are a fast-growing market that is evolving well beyond just delivering audio -- listening to music or making calls serving as the classic use cases. Newer entrants into the category may challenge Apple's (AAPL) - Get Report AirPods, the current market leader with 50% share of the wireless earbud market according to IDC.
The new breed of hearables turn earbuds into a two-way channel that put virtual assistants -- Siri, Amazon's Alexa, Microsoft's Cortana or Google Assistant -- directly in your ear. The same is true of Samsung's (SSNLF) wireless earbuds, which feature Bixby and have 10% market share.
"Looking into the future, there's a scenario which has these earbuds actually being your computer that you have on you and in your ear -- in the way we have our smartphones and smart watches today," said Patrick Moorhead, CEO of Moor Insights & Strategy. "Putting that computing power in your ear with an intelligent agent is strategic to these companies."
Amazon's Echo Buds are due out on Oct. 30, while Microsoft's Surface Earbuds will be available later this year. We'll likely know more about any new Pixel Buds when Google hosts its Pixel event on Oct. 15.
Apple, Microsoft, Amazon and Google each have their own individual strengths in attacking the smart earbud market.
Apple is the market leader, with CEO Tim Cook citing "well over 50%" growth in its wearables category in the second quarter, which also includes the Apple Watch. Amazon's Echo Buds will feature Alexa, already a popular voice assistant with its own formidable device ecosystem. Microsoft's forthcoming Surface Earbuds are oriented towards productivity, integrating with Office 365 and offering real-time dictation and translation. As for Google, a new line of Pixel Buds could include a design overhaul and improved translation capabilities.
Moorhead added that the success of each will be "100% related to how much [the voice assistant] can do."
"From a disruption standpoint, Amazon has the biggest disruption capability because they missed the whole mobile generation, and this is their opportunity to invest in what I would call the personal side of computing," Moorhead said, noting that Amazon has made Alexa compatible with a variety of mobile phones, in addition to its ecosystem of devices.
It's also possible that as the earbud wars heat up and voice assistants play a larger role in the lives of consumers, differences in capabilities will start to stand out.
Loup Ventures, which publishes an annual "Digital Assistant IQ test," ranks Google Assistant as the smartest assistant, based on correct answers to 800 questions. Google answered correctly 93% of the time, Siri was second at 83%, and Alexa came in third at 80%. In the prior year's test, Cortana came in at 63% accuracy, but has since been eliminated from the ranking because of a shift in strategy by Microsoft towards enterprise use cases.
Save 57% During Our Fall Sale. Join Jim Cramer's Action Alerts PLUS investment club to become a smarter investor. Click here to sign up and save!