Two FANG stocks are competing in a very specific category: smart speakers. While the Amazon.com, Inc. (NASDAQ:AMZN) smart speaker called Echo was the first to the party, other tech players weren’t far behind.
In fact, Alphabet Inc‘s (NASDAQ:GOOGL, NASDAQ:GOOG) own entry into the smart speaker fray, called Home, beat Alexa in shipments for the first time this year.
During the first quarter, Google shipped 3.2 million Home and Mini devices compared to 2.5 million Echo speakers. The Echo speaker relies on a Siri-like voice called Alexa, while the Home speaker relies on the Google Assistant.
Of course, the market for smart speakers is expanding, so shipment growth doesn’t necessarily mean one tech company is stealing customers from another. According to Markets and Market, research suggests the smart speaker market was worth $2.68 billion in 2018 and is slated to expand to $11.79 billion by 2023. That’s a compound annual growth rate north of 34%.
And the devices, to many less-technical users, offer many of the same value-adds and features, such as the ability to make calls via voice command, play music, check weather and so on.
The Google Home has a touch surface on top, lights that show when it’s listening or searching, and a mute button — more or less comparable to the basic features of the Amazon device family. The Google Home is just over 5.5 inches tall, supports Android 4.4 and higher and iOS 9.1 and higher, and it costs $129.
The Amazon Echo Plus is $150, the Echo is currently $85, and the smaller Dot is $40. The Echo Plus is marketed more as a smart home starter kit than just your standard voice-command speaker. The Plus is nine inches tall, the Echo is around six inches, and the Dot is just over one inch.
Amazon Having Issues With Its Smart Speakers
Still, each company wants to capture the largest slice of the smart speaker pie. Market research shows Alexa held the largest market share last year, but Google’s strong first quarter is just one reason to think the company’s smart speaker might reign supreme.
For one, there’s the question of promotion. “Retailers tend to prioritize Google’s speakers over those from Amazon, as Amazon is in the tricky position of being a direct competitor,” Canalys Analyst Ben Stanton said.
On top of that, Amazon has been hit with some negative press this week, as a user in Oregon told press that the speaker recorded her family’s conversation and sent it to one of her husband’s employees.
As CNN reported:
“Amazon confirmed the error in a statement and explained the improbable series of events that took place for it to happen. It wasn’t a hack or a bug with the device, but a case of Alexa’s always-listening microphones mishearing a series of words and mistakenly sending a voice message.”
There’s a good chance the story will blow over and that any concerns about privacy will spread to the entire smart speaker market as opposed to knocking out the first player in the space. But in the near term, it suggests the Google Home may have more momentum to keep growing its impressive first quarter shipments.
On top of that, Google stock has been moving a bit slower than Amazon. While its sales mix minimizes the impact of the speakers specifically, the positive sentiment around the shipments could help shares enjoy some gains. Amazon, on the other hand, probably has some consolidating to do.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
