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Is Google or Amazon Winning the Home Assistant Market?

Zacks

Of all the recent technological trends, the rise of home assistant products is one of the most intriguing ones. These products are developed to control home devices like home security, lighting and sprinklers, to name a few. Home assistant products also make online shopping an easy task.

As these products are fast becoming a part of our homes, the competition too is gradually heating up as to which products can emerge the best home assistants. So far, the two main competitors in this space are Amazon’s AMZN Amazon Echo and Google’s GOOGL Google Home.

Let's see what Amazon and Google have been doing to maintain their supremacy in the Home Assistant device space and how these devices help the companies in increasing their sales.

Amazon Echo Devices


Always aiming for innovation, Amazon is definitely a frontrunner in the growing Home Assistant market.

Not many people could have predicted the popularity of Amazon's Alexa when the product was first announced in 2014.It is a small speaker-like home automation device that can do everything from streaming music to dimming lights or cranking up the heat on the compatible thermostat through voice commands. It is capable of interacting with smart home products, such as the Philips Hue smart light bulbs and smart thermostats from Alphabet-owned Nest.

Amazon has been continuously adding new features to its Echo devices. So the growing list of things its devices can do has been keeping Echo in the headlines. The list includes a formidable lineup of compatible smarthome devices that Echo can control.

How Will These Echo Devices Increase Sales?

It is important to understand the nature of Amazon’s core business. It is primarily an online retailer that sells a wide array of products. So, these Echo products play right into Amazon's core retail business. These Amazon's Echo devices help a consumer in making online purchases through voice command, thus saving time and energy. Also, Alexa can play music from Amazon’s paid for subscription service and thereby act as a passive block on using rival shopping sites.

These new products from Amazon have the potential to increase sales and garner higher revenues.

Coming to the price performance, over the past one year, shares of Amazon outperformed the Zacks categorized Electronic Commerce industry. While the industry gained 53.88%, the stock returned 40.11%.

Google’s Efforts toward Fight Competition

Google on the other hand, became the second entrant in the Home Assistant space with the launch of Google Home in October last year. Much like Echo, Google Home, also performs an array of tasks such as playing music, reading books, managing calendars, answering queries, searching places, calling over cabs, controlling smart home devices and so on. It runs on Google’s new voice assistant.

Though it is still unclear how Home will benefit Google, but it will surely help create some competition with Alexa. Moreover, as voice is being seen as the next big thing in computer interaction, these products could help Google expand its revenue going forward.

Research company, Gartner, said that, 30% of all interactions with devices will be voice-based by 2018, because people can speak up to four times faster than they can type. Also, the technology behind voice interaction is continuously improving, thus increasing its use in future.

However, if will it be accepted by the mass is yet to be seen.

Coming to the price performance, over the past one year, shares of Alphabet have been steadily treading higher. The stock returned 14.45% compared with the Zacks categorized Internet Services industry’s gain of 11.46%.

Stupendous Growth Expected in This Market

Per the recent report from Gartner, consumer spending on virtual personal assistant-enabled wireless speakers will reach $2.1 billion worldwide in 2020, up from $360 million in 2015.

Also, the research firm claimed that by the year 2020, 3.3% of global households are expected to adopt a VPA-enabled wireless speaker. Werner Goertz, an analyst at Gartner, said, “The widespread adoption and proliferation of VPA speakers could result in a significant number of online shopping orders in the home being initiated from a VPA speaker, rather than a laptop or mobile device."

The strong growth projection for the personal assistant market is a key growth catalyst for Amazon and Google. It looks like these tech companies won't stop until they have full control over everyone's home.

As a booming future is being predicted for the home assistant market, Amazon and Google’s home assistant devices could quite well add to their top and bottom-line figures going forward.

Bottom Line

Importantly, the personal assistant space is still in its nascent stage. Therefore companies like Google and Amazon, among others are strong contenders in the new war of capturing consumers' homes.

Although both the companies are making continuous efforts toward releasing and upgrading new products in this space, it will be interesting to see which way consumers lean and how sales affect both companies going forward.

As technology continues to improve, home assistants could soon become even more commonplace.

Zacks Rank & Stocks to Consider

Currently, both Amazon and Alphabet carry a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include ON Semiconductor Corporation ON and Advanced Energy Industries, Inc. AEIS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For the current year, estimates for ON Semiconductor went up 7.8% in the past 60 days, and those for Advanced Energy increased 18.2%.

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