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Illustration: Rebecca Zisser / Axios

Retailers think this is the holiday season of the smart speaker, with Google, Amazon, and other tech firms spending big on marketing and discounts to get their voice-assistant technology into as many living rooms as possible.

David Watkins of Strategy Analytics tells Axios that 14 million smart speakers will be sold globally during the final three months of the year, driven by recent, heavy discounting of Google's Home and Amazon's Echo devices, as well as evidence that Alibaba's Genie is outselling expectations in China.

Why it matters: That is a lot of smart speakers: these devices tend to be bought one or two per home, and there are just 125 million households in the U.S.. Amazon and Google are going all out to move them, not because they earn a profit on heavily discounted sales, but to hook consumers and open up e-commerce and advertising revenue down the road.

Why retailers and brands should worry: Those revenues have to come from somewhere. One possibility is that they will be driven by new marketing spending by retailers and brands specifically aimed at these platforms; another is that these devices will motivate shoppers to do more shopping over the Internet.

Thumbs on the scale: According to Suzanne Tager, senior director of Bain & Company's retail and consumer products practices, Alexa-enabled Amazon devices steer customers toward Amazon private-label, in addition to items they have previously bought. Bain conducted a voice-ordering test across categories using Amazon Echo and found:

  • If a search falls within a category in which Amazon offers private label products, "Alexa first recommends the private-label products, even though these products represent only about 2%" of the total good sold from Amazon inventory, Tager says. Amazon did not respond to emails.
  • RBC Capital estimates that by 2020, 128 million Alexa-enabled devices will be active globally, meaning that a bias towards Amazon or other products on this platform could have a serious effect on the retail industry.

Google to the rescue? Chris Taylor, who formerly ran Target's experimental Store of the Future, cites retail partnerships involving Google Assistant as an example of what might work.

  • Walmart, Costco, Home Depot and Target all allow purchases through Google Assistant.
  • In a test, Gene Munster of Loup Ventures said he found that the Google Assistant's AI seems superior to Alexa's. He said Assistant understood questions better, and that it is rapidly improving. This will become more important as these companies attempt to add capabilities, like complex queries and understanding conversations with multiple participants.
  • But Amazon is not without partners of its own—Best Buy and Starbucks are working with Alexa to sell their products. Pop up stores that Amazon is opening with Calvin Klein in New York and Los Angeles also feature Echo in the dressing rooms.
  • And so far Amazon's lead in the smart speaker race is a commanding 71% market share to Google's 26%. And according to Technalysis Research, 69% of users detect little to no accuracy differences between the assistants.

A rock and a hard place: Tager says that competition resembles "the early days of a classic platform race," where tech companies compete to lock in both users and providers of goods and services.

  • The creation of dominant, high-tech platforms should be eyed warily by those who will be forced to compete or collaborate with those platforms, Tager said.
  • If voice becomes a truly popular means of commerce, brands and retailers will have to figure out how to negotiate yet another layer of technology inserted between them and the customer. "Instead of making sure you're on the first page of search results, you'll have to make sure you're the one or two items that Alexa suggests you buy," she said.
  • Taylor said voice may follow a track similar to the invention of social media—remaining a curiosity for many but a crucial promotional tool for those who figure out how to best reach its most dedicated users.

Go deeper

Former Sen. David Perdue to launch bid for Georgia governor

Photo: Megan Varner/Getty Images

Former Senator David Perdue (R) plans to announce a campaign against Georgia's incumbent Republican Gov. Brian Kemp Monday, according to a source familiar with Perdue's thinking.

Why it matters: Perdue's challenge to his former ally Kemp sets up an unprecedented "scorched earth" battle between Georgia Republicans fueled by former President Donald Trump, in the battleground state. The news was first reported by Politico.

Updated 49 mins ago - Politics & Policy

Bipartisan tributes flood in for "giant of the Senate" Bob Dole

Then-Vice President Joe Biden and former Sen. Bob Dole at an event put on by the World Food Program where he was awarded the first “McGovern-Dole Leadership Award” in December 2013. Photo: Douglas Graham/CQ Roll Call

Republican and Democratic politicians, including former Senate colleagues, are sharing condolences and memories commemorating the life of Bob Dole, who passed away at 98 on Sunday morning.

The big picture: Dole, the Republican presidential nominee in 1996, was the longest serving Republican leader in the Senate until 2018, when current Senate Minority Leader Mitch McConnell surpassed his record.

Former Sen. Bob Dole dies

Former Sen. Bob Dole in 2019. Photo: Tom Brenner/Getty Images

Former Kansas Sen. Bob Dole passed away Sunday morning at the age of 98, the Elizabeth Dole Foundation announced in a statement.

Driving the news: Dole, a revered figure in U.S. politics and the Republican presidential nominee in 1996, served in the Senate for 27 years, including 11 years as GOP leader. Earlier this year he revealed he had been diagnosed with stage 4 lung cancer.