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Sep 20, 2018

The Age of Ecosystem Dominance

Eddie Hold, President ;

Mobile , Consumer Electronics , Connected Intelligence

@eddiehold

The technology ecosystem is evolving and the smartphone may no longer be the dominant consumer product. Welcome to the Age of Voice and Artificial Intelligence (AI).

The influence of ecosystems within the consumer technology space is hardly a new concept. The PC was the first ecosystem to evolve, and the approach within the PC market has direct parallels to the smartphone-based ecosystem that we live in today. In smartphones, the Android ecosystem is based on an OEM-neutral stance (like the Windows-based PC environment), whereas Apple continues to focus on providing a more closed environment of its own hardware and OS.

While yesterday’s ecosystem had the PC at the center, today’s is built around the smartphone, which empowers both connections to additional hardware, as well as the content and services consumers demand. The next emerging ecosystem will be focused on voice control combined with AI, an evolution that is quickly coming to fruition as the launch of voice assistants in the form of smart speakers have seen rapid adoption, with 20 percent of households owning at least one device as of April 2018.

The use case for these products, as with former “hub” products within an ecosystem, is driven by a combination of services and hardware needs. For example, listening to music is one of the top use cases for the smart speaker, which fits neatly with each company’s services-based ecosystem. But we see these initial uses as a “bridge service”, to familiarize consumers with voice functionality before embracing additional features and functionality.

Just as the smartphone ecosystem’s catalyst was the mass adoption of the Web, first used within the PC environment, so too has home automation driven the need to look beyond the smartphone as the center of the emerging ecosystem. For example, using voice is much more intuitive for turning smart lights on and off vs. controlling with a smartphone.

Overall, we see a strong connection between household penetration of voice-enabled speakers and home automation devices. U.S. household penetration for home automation devices is in the single digits across all home automation categories; however, when we look at household penetration for U.S. households that own a voice-enabled speaker it jumps to double digits across all home automation categories, according to NPD’s new Evolving Ecosystem Report.

Voice assistants provide a single OEM the opportunity to better unite its various products together in a smarter way, as they can combine the actions of a security camera with smart locks, or security lights and so on. In other words, while most OEMs will – and must – continue to work within one of the larger ecosystems (Apple, Google, Amazon), they can build a comprehensive hardware solution that works better together than separately. Further, as an OEM gets the reputation for being easier to integrate, with a smoother set up and interconnection, the consumer will naturally look to purchase more of the same brand to make things easy.

These technology expansions, voice control and growth of home automation will ultimately drive the latest ecosystem change.



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