Move over, Google. In the latest development in the escalating tech device race between China and the United States, Beijing-based Baidu has overtaken the No. 2 spot in global smart speaker sales.
According to research firm Canalys, Baidu’s Xiaodu device edged past Google’s Home device with 17.3 percent of the $1.8 billion global smart speaker market in the second quarter. Amazon’s Echo stayed well ahead of the competition, with roughly 25 percent of the market. Chinese tech giants Alibaba and Xiaomi were fourth and fifth, respectively.
The gains by Baidu — reflecting fast adoption by Chinese consumers — shows the parallel competition of tech giants on both continents as they develop AI-controlled devices meant to one day run everything from cars to homes to in-store shopping.
U.S. and Chinese tech giants have long jockeyed in the race to develop the most-sophisticated phones, computers and other devices. Given the nature of the companies, however, many of the brands have first targeted their domestic populations.
That’s starting to change. China has mobilized significant resources to increase its dominance in high-tech fields as part of its “Made in China 2025″ strategic plan. Telecom giant Huawei, while facing restrictions in the United States, has been working to make inroads in Europe.
Meanwhile, Amazon and Google have been pushing their devices — and particularly their smart speakers — more internationally, too. (Amazon chief executive Jeff Bezos owns The Washington Post.)
While Amazon and Google work to grow their businesses globally, they will face technological difficulties from differences as basic as the types of homes in which consumers live, says Michael Levin, co-founder and partner at Consumer Intelligence Research Partners. While many U.S. consumers live in houses, the international tendency toward living in apartments may prove difficult for the company’s full home-control marketing strategy.
“Adapting this market to the other 80 percent of the world is not a very straightforward proposition,” Levin said.
Baidu overtaking Google, while “no small feat,” is a result of the company’s sole and aggressive focus on the fast-growing China market, said Jason Low, a senior analyst at Canalys. Google and Amazon have so far focused heavily on the United States, although their global market share will probably continue to increase.
“It’s a good gauge to see how the market is growing,” he added, saying the rankings are likely to remain fluid.
Baidu may also face further challenges as an economic slowdown in China could ding the company’s core businesses.
A Baidu spokesman said the company does not comment on specific reports, and referenced Baidu’s second-quarter investors’ call. In that call, company chief executive Robin Li said the Xiaodu Smart Display, which sells for the equivalent of $50 per unit, is becoming a “sweet spot” for the company because it has gained popularity in “not only first- and second-tier cities, but also lower-tier cities in China, becoming an important computing device for affordable Internet connectivity.”
“AI-powered smart speakers [are] an indispensable Internet channel for content and service providers, especially with mobile Internet user and time spent slowing in China,” Li said. “The rise of smart speakers seems to mirror the rise of smartphones a decade ago."
Google and Amazon did not respond to requests for comment.
It is unclear how the escalating trade war between the United States and China will impact the global smart speaker market, or the global economy generally. On Friday, President Trump announced he would raise the rate of tariffs on Beijing and demanded that U.S. companies cease doing business with China. Trump said Monday that trade negotiations are set to resume, though details were elusive.
Experts say that the trade war is more about technology than trade. In May, the Trump administration penalized Huawei by adding it to the Commerce Department’s Bureau of Industry and Security “entity list,” making it difficult or impossible for the company to do business with any U.S. firm. Huawei has since been granted several “temporary general licenses” that allow it to conduct some business here, including providing software updates.