Chinese companies use localized services to take on tech giants
Artificial intelligence (AI) technology developed by tech giants has turned the humble speaker into the tech world's latest infatuation, and Chinese tech mammoth Alibaba Group Holding wants a piece of the action.
The company is getting ready to officially roll out its AI-powered home speaker next month in its bid for a slice of the burgeoning market pioneered by its U.S. counterpart Amazon.
The hands-free speaker, dubbed "Tmall Genie X1," is equipped with virtual voice assistant AliGenie, which reacts to voice commands in Putonghua. It is now in its testing stage at a price of 499 yuan ($73.40) and is set to be ready for Chinese end users on August 8.
Similar to Amazon's Echo, Tmall Genie X1 features functions such as smart home control, music playback, and setting reminders, while also enabling consumers to easily buy goods online.
In the view of Qian Xue, head of Alibaba's AI team, the AI-powered speaker is expected to promote a new mode of interaction between humans and computers: controlling electronic devices via voice.
Compared with the voice, a natural form of communication, the current touch-screen technology is unlikely to be the best interaction method, despite its wide application in smartphones, Qian said in a statement sent to the Global Times on Monday.
Alibaba is not the only Chinese company to dip its toes into the smart speaker segment.
China's second-largest online retailer JD.com Inc has already tested the waters via its $25 million joint venture, Beijing LingLong Tech Co, with leading Chinese voice technology company iFlytek in 2015, following hot on the heels of Amazon.
Priced at 698 yuan on JD, its flagship Wi-Fi-enabled DingDong AI smart speaker can hear and respond to voice commands, just like most smart speakers in the market.
In an e-mailed reply to the Global Times on Tuesday, JD described the DingDong smart speaker as "the strategic product" for its application of AI.
Promising venture
Intelligent home speakers will challenge smartphones in the home of the future, analysts from U.S.-based market consultancy Strategy Analytics predicted in a report released in late February.
David Watkins, director of the Connected Home Devices unit with Strategy Analytics, said in the report that the promise of such hands-free interaction with the Internet is "a very compelling one."
Home smart speakers such as Amazon's Echo and JD's DingDong have already caused a wave of excitement among consumers.
Sales of DingDong smart speakers rose 378 percent year-on-year during this year's 20-day shopping festival starting from June 1 on the JD platform, according to media reports.
When contacted by the Global Times, JD did not reveal the specific sales figures of DingDong since it was first launched in May 2015.
Last year, shipments of smart speakers reached 5.9 million units globally, according to the Strategy Analytics report. The value of the market is expected to exceed $1.5 billion this year and reach $5.5 billion by 2020.
US market research firm Gartner also sees the smart speaker market as a promising one, expecting 3.3 percent of global households to adopt speakers with virtual personal assistants by 2020.
As the frontrunner in the smart speaker market, Amazon's Echo has maintained its dominance since its debut in 2014. The latest data from Strategy Analytics showed that strong demand for Echo has brought the number of speakers based on Amazon's voice assistant system Alexa in use to over 6 million by the end of 2016.
Alexa seized 88 percent of the world's smart home speaker market in the fourth quarter of last year, while Google's Assistant occupied a 10 percent share over the reported quarter following the launch of its Home speaker last November.
Looming competition
Currently, Echo and Home, which respond mainly to English speakers, are not readily available in China.
"But this does not mean the nation's smart speaker players do not need to concern themselves about the possible competition from the Western world," Li Yi, a senior research fellow at the Internet Research Center under the Shanghai Academy of Social Sciences, told the Global Times Tuesday.
Chinese consumers with the money to spend can always find a way to purchase US cutting-edge electronic gadgets, even though they are not officially sold in the country, said Li.
Several Chinese consumers have picked up Echo at the price of 1,799 yuan via JD, information on JD's marketplace showed.
There has also been market speculation that Apple is intending to launch its new smart speaker HomePod in China. The Siri-powered, music-focused HomePod, unveiled by Apple in June, will first become available in the US, UK and Australia for $349 in December.
China, home to nearly 20 percent of the world's population and a fast-growing economy, is widely perceived as a lucrative and attractive market.
In competing with Western tech veterans, domestic firms such as Alibaba and JD may lag behind in terms of AI technology development, but they have the chance to lead the Chinese smart speaker market, given their edge in the offering of localized services, said Li.
In the view of Wei Qiang, CEO of Beijing LingLong Tech, knowing what the customer needs is crucial.
"The key to the success of smart speakers is identifying potential customer demand and building up the scenarios to meet customer demand," Wei told the Global Times Tuesday.
The DingDong-adapted JD Alpha, an AI services system developed by JD, now allows full voice control of more than 10 million smart products in over 60 categories covering items such as rice cookers, air conditioners and curtains.
Alibaba's AliGenie, a latecomer to the game, is developing new location-based functions such as food delivery calls, in addition to traditional features such as smart home control and playing music.
At present, both DingDong and Tmall Genie X1 are only targeting the Chinese market.
China's smart speaker industry is still in its early stages and full of huge opportunities as more and more customers get to know the convenience that smart speakers can bring them, said Wei.
