Deloitte predicts rise of smart speaker in Canada

13 December 2018 Consulting.ca

In their 18th annual Technology, Media and Telecommunications (TMT) Predictions report, Big Four firm Deloitte has forecasted that the smart speaker will emerge as the fastest-growing connected device in the world.

Smart speakers – internet-connected speakers with integrated AI assistants (Amazon Echo and Google Home foremost among them) – are slated to continue growing in popularity in Canada and around the world. In 2018, 98 million units were sold at an average of US$44 each; Deloitte projects the market will grow to US$7 billion in 2019, with 164 million units sold at US$43.

That 64% growth rate will make smart speakers the fastest-growing connected device category in 2019, with a global installed base of over 250 million units.

Canada’s current speaker adoption rate is 9% – roughly on par with Australia and Germany, but lagging the United States' (20%) and urban China’s (22%) much higher market penetration.

The smart speaker adoption rate in Canada is being dragged down by lower usage in French-speaking Quebec, where adoption is almost half the rate of the rest of the country. “Language acceptance is still a challenge in Quebec, with usage lagging behind the rest of the country,” commented Duncan Stewart, director of research for TMT at Deloitte Canada.Current smart speaker adoption ratesAt the end of 2017, smart speakers were almost exclusively making sales in English-speaking countries, with over 95% of sales in the US and UK. Deloitte projects that by the beginning of 2019, the speakers will be breaking into regions where the majority of people speak French, Spanish, Italian, Japanese, and Chinese. In most of these geographies, smart speakers are likely to have the fastest growth in ownership among smart devices – as the capital-intensive process of wider language support in voice recognition expands.

Aside from the consumer uses of digital assistant-enabled speakers (e-commerce, looking stuff up on the internet, etc.), various emergent commercial applications are expected to drive smart speaker sales. Deloitte surmises that in the long term, potential demand for speakers could rise into the billions, installed in most offices, hotels, classrooms, and hospitals.

Several hotel chains have undertaken mass deployment of smart speakers to serve as in-room concierges – with Marriott planning to install 100,000 units in China alone – while the Wynn Las Vegas has already installed smart speakers in all of its 4,748 rooms.

One hospital in Sydney has piloted smart speakers as an alternative to the bedside call button – allowing patients to specify requests and perform simple tasks like turn on the TV, lower the blinds, on turn off the lights. Drive-thru restaurants could also use voice automation technology to take orders, freeing up workers from having to manually process orders.

Meanwhile, voice recognition could be the most productive and easy way to communicate with computers in occupations where the worker’s hands are occupied – like in factories, labs, kitchens, and transportation. The report says that the increased utility of workplace applications could eventually make workplace speakers exceed the number in the home.

Speaker box/The growth beyond

The utility of smart speakers is what will ultimately drive growth of speaker adoption beyond 2019, according to Deloitte. However, most people have historically been disinterested in voice recognition, with most voice assistants on smartphones, tablets, and computers never having been used. 57% have never used their smartphone’s voice assistant, while 71% have failed to use it on a tablet and 81% haven’t used it on their PC.What people use smart speakers forFurthermore, most people don’t even know their smartphones have voice recognition: In Canada, only 15% are aware of voice recognition tech on their phone, while only 4% use the feature – figures similar to those of respondents in the US, UK, and Australia.

Smart speakers’ utility depends on the applications available, and what consumers realistically use them for. In Canada, the number one application of smart speakers was for checking the weather – a very Canadian use. Meanwhile, the top application in most other markets was playing music, something fairly easily accomplished with ‘dumb’ speakers. Other popular uses were setting alarms, searching for general info, and ‘amusement.’

“Smart speaker sales to both new and existing users should grow strongly in 2019, and also likely in 2020,” commented report co-author Paul Lee, a Deloitte UK Partner in the TMT practice. “For the market to continue growing beyond then, however, the device should have multiple applications beyond just playing music or speaking a weather forecast. It needs to become more useful, more often. More applications and better accuracy will likely be key to market growth.”

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