While using devices like the Echo or Apple's (AAPL) - Get Report voice assistant Siri is still not the norm in the U.S. in 2017, their popularity is growing, according to a new study from eMarketer. A big part of that usage is coming from the tech-savvy millennials, with a third of the generation saying they use a virtual assistant
When looking specifically at voice-enabled speakers that can provide everyday help by telling you the weather forecast or the day's top headlines, Amazon's Echo claims 70.6% of the market, followed by Alphabet's (GOOGL) - Get Report Google Home, which claims just 23.8% of the market. The remaining 5.6% of the pie is shared by smaller players, such as Lenovo, LG, Harmon Kardon, and Mattel.
Part of the Echo's clear lead is simply because it was released back in November 2014, while Google Home was released just this past November. eMarketer VP of Forecasting Martín Utreras said he thinks Google was late to the game because search has more of a clear path to monetization for Google vs. hardware, particularly when it comes to the still relatively new digital assistant pieces of hardware. "In general, Google has been less aggressive than Amazon when it comes to hardware," he added.
The two devices might be facing competition from Apple soon, according to a note from KGI Securities analyst Ming-Chi Kuo in early May. The top analyst said there's more than a 50% chance that the tech giant will announce an Echo competitor at the Apple Worldwide Developers Conference (WWDC) this June and start selling it in the second half of this year.
This prediction was echoed by Australian "leaker" Sonny Dickson when he tweeted that Apple's home assistant will be a direct competitor of Amazon's Alexa and will utilize Beats technology and run a version of Apple's iOs.
As competition heats up in the sector, the Echo will obviously lose part of its share in the market, but it will still keep its lead for the foreseeable future, eMarketer said. This is significant for Amazon considering the number of Americans who will use a voice-enabled speaker at least once a month in 2017 will jump by 128.9% year-over-year to 35.6 million.
"Consumers are becoming increasingly comfortable with the technology, which is driving engagement," said Utreras. "Also, as prices decrease and functionality increases, consumers are finding more reasons to increase adoption of these devices."
Besides being released two years before Google Home, Echo also has a pricing advantage through its $50 Echo Dot. "That pricing is very attractive to customers," Utreras said. For the full-sized Echo, customers can expect to pay $180 vs. the $129 for Google Home.
While some people have yet to come in contact with a digital speaker, most people have used a digital assistant, a.k.a. Amazon's Alexa, Apple's Siri, Google Now and Microsoft's (MSFT) - Get Report Cortana. Usage of these software assistants is expected to grow by 23.1% this year, meaning 60.5 million Americans will use one of these assistants at least once per month.
Not surprisingly, older millennials between the ages of 25 and 34 are the heaviest users of digital assistants, representing 26.3% of the pie. "Older millennials are the core users of virtual assistants, mainly due to their demand for functionality over entertainment," Utreras said.
While Amazon doesn't release sales figures for the Echo, Consumer Intelligence Research Partners estimated in November that Amazon had sold 5.1 million of the $180 Amazon Echo devices since their introduction in November 2014.
Earlier this year, the Echo raised privacy concerns after law enforcement in Arkansas asked Amazon to turn over audio recorded by the Echo over a 24-hour period in the bathroom where a man was found dead in a bathtub. Law enforcement said the recording could help them determine whether the man was murdered by his friend that owned the house he died in or if he accidentally drowned. Amazon fought the search warrant, claiming that doing so would "chill" Echo users from exercising their free speech rights in their own homes. However, when the defendant said he was fine if the recording was turned over to law enforcement, Amazon dropped its fight and handed it over.
Despite this case showing how the Amazon Echo could potentially be used against its owner, this story will most likely not have an effect on sales of the device, Benchmark analyst Daniel Kurnos said. "The reality of the situation is that people already think Big Brother is watching anyway," he said.
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