Global BrandZ™ Research Director
Kantar Millward Brown
How do you define true innovation and leadership? To me, truly leading innovation does more than disrupt the established order; it shapes and creates something genuinely ground-breaking, delivering benefit for all consumers and perhaps establishing an entirely new competitive landscape in the process.
That is exactly what Amazon achieved in late 2016 with the launch of Amazon Echo, the first of the “smart speakers”, allowing users to interact with Amazon’s AI interface Alexa using their voice alone. Brands and consumers have been in metaphorical conversation for decades, but with the arrival of Echo, an instant two-way narrative became reality for the first time.
The obvious attraction of this emerging category is one of immediacy and convenience in our increasingly busy lives; smart speakers serve up “virtual assistance” via a physical presence, helping with myriad tasks and challenges ranging from weather forecasts and general knowledge queries to arranging delivery of shopping, takeaways and taxis direct to our doors.
The Echo is the embodiment of Jeff Bezos’s “Always Day One” mantra and, by being first to market, Amazon stole a march on the other ecosystem superbrands, Google and Apple. A tactically low entry cost of £90 allowed Echo to quickly build a solid user base and not only become synonymous with the category, but also establish a range of alternatives for different needs and budgets.
This initial success sparked the rapid launch of Google Home, featuring Google Assistant, in April 2017, as well as the much fanfared but comparatively slow to market Apple Homepod, featuring Siri, in January 2018. Amazon also recognised that the Echo may not appeal to those consumers demanding very high sound quality, and so announced a partnership with Sonos and launched the Sonos One speaker (which comes with Amazon’s Alexa built in as standard) in October 2017.
By definition a “smart speaker” comprises two components: the ”smart” element, relating to the intelligence and usefulness of the in-built AI software, and the design and sound-quality capabilities of the physical speaker. Given the spectrum of available specifications and capabilities, consumer choice is ultimately defined by the individual’s needs on the “smart vs. speaker” continuum. Is the need anchored around superb sound quality or highly knowledgeable, personable and versatile AI? For many, the reality is likely somewhere in between.
So, what can BrandZ™ data tell us about who holds the upper hand following the initial skirmishes in what is likely to be a long term and ever evolving campaign? What are the key ingredients for success?
First mover advantage
It seems that Amazon is enjoying a clear first-mover advantage and is by far the most “top of mind” brand in the category, with 50 percent of consumers mentioning the brand first when asked to think about brands of smart speaker. This is more than twice the number mentioning Google (19 percent) and more than three times those mentioning Apple (16 percent).
Amazon is also perceived to be the most disruptive of the three, perhaps also a result of being first to market and enjoying a short period of exclusivity. The brand achieves a disruption index score of 169 (the average brand scores 100) versus 152 for Google and 137 for Apple.
Speaking the language of Meaningful Difference
Diagnosis of the performance of the three main players using BrandZ™’s key equity building blocks – Meaningful, Different and Salient – reveals some interesting insights. Amazon’s huge salience score of 170 illustrates an immediacy of association with the category, though the brand has also achieved real meaning in a relatively short period of time (Meaningful index 141), indicating both functional excellence and the beginnings of a strong emotional connection.
Google is also reasonably Meaningful (116) and the second-most salient brand in this category (107), though seemingly lacks difference compared to Amazon and Apple with a below average score of 97.
In contrast, as is often the case with its products, Apple is seen as hugely different (128), likely driven by its high spec speaker hardware delivering best-in-class sound quality. Given the brand’s comparative lateness to market, however, it is perhaps not surprisingly that Homepod currently lacks both salience (86) and meaning (99).
Clearly the three brands have different pricing strategies; Amazon and Google are operating at a relatively low price point in a bid to attract consumers based on the depth of their functionality. Amazon Echo has a huge range of “skills” and partnerships for users to draw on, as well as the ability to order products direct from Amazon’s vast range. Google Assistant has the advantage of linking to Google’s vast search capabilities to answer a huge variety of questions and has also established retail partnerships to allow a voice shopping catalogue of its own. In contrast, Apple Homepod clocks in at around three times the price of the others, driven by the brand’s investment in providing exceptional sound quality. The key question is whether this is enough to justify such a price differential when many consumers will be making a decision based on more than sound quality.
So, what are the key contributory factors towards Meaningful Difference for smart speakers, and how does each brand perform? BrandZ™ data suggest three key battlegrounds:
Attractively designed, Distinctive, Stylish Frontrunners – Apple and Amazon
Both Echo and Homepod hold the edge; delivering attractive, distinctive designs
Works better than others, Range of services, Straightforward, Knowledgeable Frontrunner – Amazon
Echo is deemed to have a clear functionality advantage, driven by perceptions of general all-round competence and a wide range of services. Homepod may have the edge in sound quality, but perceived issues with the comparative sensitivity and capabilities of Siri vs. Alexa and Google Assistant are likely to be having an impact.
Fun, Playful, Friendly Frontrunners – Amazon and Google
Though all three brands are fun and enjoyable to use (likely an effect of the initial novelty factor), Homepod underperforms in terms of perceptions of being both playful and friendly vs. Echo and Google Home. Again, this is likely to be due to the view that Siri is more robotic and less personable than both Alexa and Google Assistant, with less accurate intonation and pronunciation equating to a less lifelike experience.
Evolving the conversation
In a category that didn’t exist just 18 months ago, the sheer scale of investment and growing pace of innovation illustrates the high stakes as the main players strive to achieve next-level consumer relationships. Further technological advances and investment are certain, as well as an increasing focus on striking the right deals with the right partners to improve brand experience and deliver ever more capability.
There are clear opportunities here not just for the smart speaker brands themselves but for brands from many different categories to expand reach and imbue meaning and momentum beyond traditional barriers. Amazon has gained an initial, hard-won advantage, but can it stay ahead of the pack for the long term? The next phase of the conversation starts now.