Smart Speaker Market Slows, but Echo Still Dominates

Amazon Echo represents the biggest hardware product that Amazon offers, and arguably the largest single branded product it sells. The strategy behind Echo has generated significant debate since Amazon first launched it in 2014. As Amazon announces layoffs, particularly in the division responsible for Echo, we provide an update on market position.

The future for smart speakers is not entirely clear. The early-adopters and second-movers are in, and they have some core use cases - listening to music, making quick Internet queries (like the weather and fact-checking), and setting alarms and timers. Some are starting to use them as home automation hubs, but that opportunity is at a very early stage. Light bulbs and smart outlets are easy additions, and home security will likely come next, but smart appliances with their longer replacement cycles will take longer. 

As of the December 2022 quarter, Amazon Echo had about two-thirds of the US market, defined as the installed base of individual units of all models (Chart 1). Google Home had about one-quarter of the installed base, while Apple HomePod had the remainder, at about 6%.