Alexa is all smiles in the new year. Nielsen reports that over 41% of US consumers now own a smart speaker, up 21.5% from last year, a remarkably swift and widespread adoption of this new technology. As a result, analysts at RBC Capital Markets have announced that smart speakers are now at a point of “critical mass.” But what exactly does that mean?
The concept of “critical mass” derives from physics. It refers to the precise volume of a nuclear product required to set off a nuclear explosion. When used by economists, it refers to the point at which a new product reaches sufficient market saturation that it will continue to generate rapid new growth. For example, smartphones reached a point of critical mass in 2011 when roughly 20% of the US population owned one. Today, over 77% do. Furthermore, reaching critical mass for a technology can help spawn an entire economic ecosystem around that product. In the case of smartphones, that ecosystem now includes many of the biggest tech companies in the world, including Uber, Grubhub, Venmo, Instagram, and many others, whose rise coincided with the massadoption of the smartphone.
Which brings us back to smart speakers. Now that smart speakers have become a critical mass platform, many questions remain to be answered. Will consumers remain content to use their speakers only for checking weather and playing music? Or will they come to expect and demand more from their voice assistants? Which companies will be the new Uber or Venmo of the connected speaker world? Already, signs point to an optimistic outlook for early adopters of smart speaker technology. In 2018, Alexa’s third-party app ecosystem experienced 150% year-over-year growth in skills, testifying to a growing appetite for smart speaker functions. Meanwhile, continued improvements in voice recognition and artificial intelligence are increasingly able to provide a personalized experience for speaker-enabled spending. In fact, the strategy consulting firm OC&C predicts that by 2022 purchases from voice assistants will represent a $40 billion market.
Developments in voice technology are clearly poised to deliver an array of future benefits for users. Although there is no telling exactly what the array of benefits might be, there is no doubt that smart speaker adoption will only accelerate faster as they begin to emerge. Within a few years, smart speakers may feel as pervasive—and essential—as smartphones have become today.
