Tech giants will probably dominate speakers and headphones
Tech giants will probably dominate speakers and headphones.MUSIC lovers do not typically go to the opera to buy a speaker. But at the Palais Garnier in Paris they now can: Devialet, a local maker of high-end speakers, on November 29th opened a store in the 19th-century music venue to sell its most sophisticated product, called Phantom. Looking like a dinosaur egg, this supercomputer for sound (priced at $3,000) is considered one of the best wireless speakers available. It also comes with a dedicated streaming service for live performances, including some at the Palais Garnier.
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This Phantom at the opera is the latest example of how digital technology is transforming speakers, headsets and other audio devices. Once mostly tethered to hi-fi systems, they are now wireless, increasingly intelligent and capable of supporting other services. As a result, the industry’s economics are changing.
All this started to change with the advent of smartphones, which made music more portable by connecting music-streaming services such as Spotify with wireless speakers. Smartphones have also given a boost to headphones, which are becoming ever more versatile, with features now ranging from cancelling out ambient noise to real-time translation.
These new possibilities have proved hugely popular: the global market for audio devices has rocketed in recent years (see chart). According to Futuresource, only about 200,000 wireless speakers were sold in 2009; this year the number is expected to be 70m. Headphones have been on a similar tear.
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Smartspeakers, which were pioneered in 2015 by Amazon with the Echo, will be even more disruptive. Nearly 24m of these devices, essentially voice-controlled remote controls for everything from music to lights, will be sold worldwide in 2017, estimates Strategy Analytics, another market researcher—a number it expects to quadruple by 2022. Once households have one, they buy more to spread them throughout their homes (apparently nearly a tenth now live in bathrooms).
Smartspeakers are pushing the audio-device industry to become “horizontal”. The voice that emanates from Amazon’s Echo or Google’s Home is not just a digital assistant, but a “platform” for all kinds of services, of which most are developed by other firms. Alexa, as Amazon’s version is called, already boasts more than 25,000 “skills”, as the firm calls such services. These range from ordering goods and finding a mobile phone to turning up the heating and (early next year) asking The Economist for the latest on any given topic. Similarly, wireless ear buds, such as Apple’s AirPods and The Dash by Bragi, a startup, may become so clever that more and more people will leave them in all day, for instance to monitor their health or for constant access to a digital assistant.
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Conventional speaker firms are trying to catch up. In September at IFA, a trade show in Berlin, booths of various makers were adorned with logos of Amazon or Google, signalling that they already have or will integrate a digital assistant in their products. But if the history of the smartphone is any guide, such platforms will turn the hardware into a commodity, with most of the profits going to the providers of software and services. Having sold 75% of all smartspeakers (at low prices that are thought to be close to the cost of making them), Amazon is now the world’s biggest speaker brand. Incumbents will also have to contend with Apple, despite the delay of its smartspeaker until early next year.
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