Why Apple, Amazon, Google and Microsoft are all betting on smart speakers

If you'd never heard of a "smart speaker" before last week, it's understandable. So far, smart speakers have mostly been the domain of early adopters,who aren't afraid to riska little cash on a new gadget.

But now thatApple has unveiled its smart speaker offering, the HomePod, mainstream consumers are much more likely to pay attention.

Smart speakers are home digital assistants, usingvoice-recognition technology to deliver internet content in an interactive, hands-free way.

Users might ask their smart speaker for a weather report while doing the dishes, or tell it to stream kids' musicwhile trying to wranglea toddler.

Of course, most new smartphones can already do those things, since they have built-in voice-recognition software like Apple's Siri or Google Assistant.

ButApple, Google, Amazonand even Microsoft are still betting on smart speakers, and their motivations go well beyond simply selling more gadgets.

Selling you other services

For all four companies, a smart speaker in your home serves as a platform to make money in other ways.

"Apple will want to sell you Apple Music as a service, and other services likely are to come," said Bob O'Donnell, president of consulting company TECHnalysis Research. (Apple is touting its HomePod as a powerful hi-fi speaker above all.)

"Amazon obviously wants to do commerce-based services, and Google wants to do search and other kinds of things, potentially, where they can deliver advertising and other kinds of services," said O'Donnell.

Unlike Apple, Amazon and Google, Microsoft hasn't launched its own smart speaker hardware. But speaker-maker Harmon Kardon recently unveiled the Invoke, a smart speaker powered by Microsoft's Cortana voice-assistant software, which is also built into the Windows 10 operating system and Xbox One gaming console.

"Microsoft, like these other companies, would like to be that central operating system in your life, be it in the car, be it on your phone, on a mobile device, or in the home," said David Watkins, who researches connected home devices as a director with technology advisory firm Strategy Analytics.

A technological beachhead in your home

Smart speakers are already being designed to act as control pointsfor so-called "smart home" devices.

Over time, smart speakers will "become a hub or a gateway to connect your smart home appliances," said Bob O'Donnell of TECHnalysis Research.

For example, Amazon's Echo smart speakers are capable of controlling a number of internet-connected home devices, ranging from lightbulbs to thermostats to door locks. The Google Home smart speaker has similar functionality, and Apple's HomePodpromises to do the same.

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Current smart speaker users tend to usetheir smart speakers for relativelymundane applications like streaming audio and checking the weather, but experts say the trend is toward more sophisticated use.

"Ultimately we expect some of those other applications, like controlling lights, like ordering goods online, and even making phone calls, those kinds of things will start to take more prominence in terms of the usage statistics," said Watkins.

Pavingthe way for a voice-controlled future

Smart speakers also serve as a proving ground for the voice-processing technology in which Amazon, Apple, Google and Microsoft have all invested.

The endgame for tech companiesis forconsumers to rely onvoice-recognitionsoftware wherever they go,saidGeoffBlaber, an analyst with market intelligence firmCCS Insight.

"So whether you're using your phone, whether you're in the car, whether you're in the office,whether you're in the home, you are using their platformto query and search and help you through the day, basically."

Apple's new products

7 years ago

Duration 6:05

Bob O'Donnell, president, TECHnalysis Research, on Apple's latest offerings at the World Wide Developer's conference

Bob O'Donnell of TECHnalysisResearch sees smart speakers as a step inthe ongoing metamorphosis of human-computer interaction.

"In the past we chose to enter into the digital world. Now the digital world is coming out to provide us more context and more information," he said.

David Watkins of StrategyAnalyticshas a similar view.

"We're looking really at a new way of interacting with the internet, a paradigm shift, if you like, away from the old way of touchscreen and mouse-keyboard interface, and I think increasingly we'll see a lot of interactions with internet coming through voice first and foremost," he said.

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According to Watkins, Strategy Analyticshas forecast 62 million smart speaker units sold in 2022, up from six million sold in 2016 a forecast that was made before Apple announced the HomePod.

But like any hot new technology, saidWatkins,the ultimate popularity of smart speakers is far from certain.

"There's been loads of products in the past that have seen this huge hype and excitement around them, and there's been huge early adoption, for them to fail just a couple of years later."