Banco Bilbao Vizcaya Argentaria : The Chinese speakers that are challenging Google and Amazon

Smart speakers are becoming one the main commercial battlefields for world technology corporations.

What started out as an almost exclusively Amazon move with the launch of Amazon Echo, fitted with the personal assistant Alexa in 2014, is today a game on various fronts where Amazon is in the lead, and where Google is already playing a leading role with Google Home (26,5%), whereas Apple, which arrived into the market a little later, must make do with 6% for the time being.

The support given by all these giants to smart speakers is much more than merely commercial. Strategically, these devices are an excellent means of access to their ecosystems, as well as a tool to help sell more products - it has been observed that owners of an Amazon Echo increase their purchases of consumer goods via Amazon by 29% -. But what is probably the most important aspect is that they supply all manner of highly interesting data for the companies on consumer behaviour at home.

US vs China

This is, therefore, not about selling a simple electronic device: it is a global sales battle of much greater significance. A battle in which all these powerful US corporations are coming up against a serious hurdle: their situation in China, a market of almost 1400 million people, four times that of the United States.

Without forgetting that the Chinese regime is far removed from the standards of Western democracies and sets its own rules - the Google search engine has not worked there since 2010 due to censorship problems, although there are rumours that it is negotiating its return -, it is the language which is the main stumbling block faced by US smart speakers in China. In short, it is about selling a machine that understands human beings and can answer in their language, and it is estimated that 30 languages and some 130 dialects are spoken in China.

The recognition and processing of all these languages for the artificial intelligence of these speakers is an enormous challenge which, to date, the US companies are unable to tackle. Only Siri, Apple's personal assistant, is able to work in Mandarin. As is the case with Amazon Echo and Google Home, the Apple smart speaker, the Homepod, is not being sold for the time being in China.

The advancement of the Asian giants

The ground to be covered for the Chinese companies is thus very large. How are they attempting to take the best advantage of it?

Alibaba, the Chinese electronic trading giant launched its smart speaker Tmall Genie in July 2017, having sold over one million units. Moreover, it came to an agreement with the Marriott International hotel chain to fit 100,000 rooms with its speakers.

Tencent is about to launch its own smart speaker, whose main strength is the integration with WeChat, Tencent's `proprietary application with 1000 million active users.

And Baidu, known as the Chinese Google, has several smart speakers in the market and is also trying to convert its model Raven H, designed in collaboration with the Swedish design company Teenage Engineering, into an aspirational product.

Another Chinese manufacturer to be reckoned with in this market is Xiaomi, which at the beginning of this year entered an agreement with Microsoft in order to, among other areas, explore how to integrate the US company's current personal assistant Cortana in the Mi Al speaker manufactured by Xiaomi. Like Siri, Cortana speaks and understands simple Chinese, but this market's complexity and potential requires so much more.