Surviving the Silicon Valley Onslaught
Why Smart Speakers Are Everything That Matters in Audio
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From Issue Six of Gear Patrol Magazine.
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For beloved audio brands that rely on pedigree and performance to maintain their elite status in the audio realm, the threat of smart speakers from Amazon, Google and Apple that tout convenience over performance alone has never been more severe.
Not long ago, you might have scoffed at the idea of Amazon or Google being audio companies, but both have become primary contenders in the heavyweight bout for the best voice-activated speakers — smart speakers in techno-babble parlance. Amazon, with its Echo speaker, and Google, with its Google Home lineup, have sold tens of millions of smart speakers since their introductions, and there’s no sign of the trend relenting; Amazon sold 22 million of its Echos in 2017 alone. And now that Apple has entered the fray with the HomePod, another tech Goliath has joined the game, fueling even more smart-speaker sales. Canalys, a leader in global technology market analysis, estimates that 56.3 million smart speakers will be sold in 2018. Basically, smart speakers are flooding the zone.
More high-quality, highly functional speakers? What’s wrong with that?
For a consumer, this is good news. There are many options to choose from and likely more to come, which means more competition. And competition among tech brands breeds better products. A larger existential question looms, though: how will the influx of smart speakers affect traditional, beloved portable-speaker powerhouses like Bose, Bowers & Wilkins, Ultimate Ears and Bang & Olufsen? At first glance, the outlook doesn’t look great.
The solution that many of these speaker companies are resorting to follows the old adage: if you can’t beat them, join them.
When Amazon first introduced its Amazon Echo back in 2014, the company didn’t market it as a high-performing speaker. Instead, it served as an important beachhead for Amazon’s voice assistant, Alexa — a listening device that was all about the convenience factor. For the first time, all kinds of information, like music, home control options and commerce abilities, were available with a simple voice command. It aligned perfectly with Amazon’s modus operandi of being incredibly convenient for customers. It also made home audio more accessible by offering speakers at an entry-level price point.
In the past two years, Amazon and Google have continued to iterate, releasing better-sounding versions of their smart speakers. But the real story is Apple’s HomePod: it’s a bona fide powerhouse of an audiophile-approved speaker, which should put traditional speaker companies on official notice. And it doesn’t stop there. Silicon Valley’s smart speakers are going after home-entertainment and multiroom speaker systems, too. Their competitive edge is exactly where you would imagine Silicon Valley would want to compete: software.
Google has integrated its Chromecast technology in premium televisions and soundbars from the likes of Sony, Vizio and LG. And even Sonos, with its enormous success in multiroom speakers, is fighting a new front with Amazon and Google, who have both added multiroom functionality to their smart speakers. In fact, the Google Home Max is an unapologetic Sonos Play:5 doppelganger. Apple will follow suit in the multiroom speaker category when a software update for AirPlay 2 releases later this year.
Note: As of May 2018, AirPlay 2 is now available.
How will popular stalwarts like Bose or Sonos convince customers that their speakers are different from Amazon’s, Google’s or Apple’s? It’s a question other industries have struggled to solve. The Swiss watchmaking industry, for example, has not yet cracked the formula to create a competitive smartwatch. In the past year, Apple has surpassed all of the traditional powers in the watch industry — Tag Heuer, Omega, IWC and even Rolex — to become the number one watchmaker in the world. “It’s not only a crisis,” Antonio Calce, chief executive of luxury watchmaker Girard Perregaux, told the Wall Street Journal. “We must rethink the existing business model.”
And Sonos has done just that. In March 2016, after announcing a number of layoffs that would enable them to invest more into bringing voice-recognition capability to its products, the company’s former CEO and cofounder, John MacFarlane, wrote in a blog post, “Alexa/Echo is the first product to really showcase the power of voice control in the home. Its popularity with consumers will accelerate innovation across the entire industry. What is novel today will become standard tomorrow.”
The solution that many of these speaker companies are resorting to follows the old adage: if you can’t beat them, join them. Sonos announced its first smart speaker last fall, the Sonos One, which works with Amazon’s Alexa and will eventually be compatible with Apple’s Siri and Google’s Google Assistant. Ultimate Ears did the same in 2017, releasing its first speakers with built-in Alexa support: the UE Megablast and Blast. In many ways, integration might seem like the easy option for these audio companies, but it also might be the only option. Competing with the industrial scale and resources of Amazon or Google is virtually impossible for even the most successful of audio brands. The resources required to craft the software and build an infrastructure for a virtual assistant are enormous and far from the core competencies of speaker brands. Further hampering efforts are fickle consumers who crave more cohesion among their gadgets. No one wants yet another voice assistant to talk to.
56.3 million smart speakers will be sold in 2018. Basically, smart speakers are flooding the zone.
Still, we can’t help but wonder if this integration with tech companies is being done begrudgingly. For speaker makers who have long touted their individual formulas for audio performance as a point of differentiation, this idea of audio quality being second on the features list must be an unfamiliar, if not unnerving, one. Amazon, Google and Apple will continue to make bigger and better-sounding speakers, at increasingly competitive prices to push their individual voice assistants into every consumer touchpoint.
Traditional powers like Bose or Bowers & Wilkins may be powerless to fight back in the smart-speaker space, forcing them to shift toward full integration of existing voice assistants and refocus their R&D on further differentiated products. While this may play out well in the long run for consumers with bifurcated expectations of their gadgets — convenience or complete differentiation — the road to that new reality may still be littered with the markers of brands who fail to adapt quickly enough.
If there’s a silver lining, it’s that many of these beloved speaker brands have something tech brands may not: heritage. Consumer convenience is an inevitability, but provenance can go a long way. Generations have grown up listening to speakers by Bang & Olufsen, Bowers & Wilkins, KEF and Bose. The ability to reintroduce themselves to consumers by tapping into the romance of hi-fi may serve as a powerful driving force to win new buyers. The high-wire act of balancing the adoption of voice recognition and other smart-speaker capabilities while tapping into the allure of pedigree will be something to pay close attention to. As voice assistants continue to become a mainstream feature, the question for traditional brands will be whether they can maintain their identities in a world where the most common way of interacting with their products will be by turning to them, saying, “hey,” and then the name of another brand.