An Analysis of Smart Speaker Industry in the China Market: Using the Tmall Genie Product Family as an Example

1. An Analysis of Smart Speaker
Industry in the China Market:
Using the Tmall Genie Product
Family as an Example
STUDENT: LI-CHUN KO
ADVISOR: PROFESSOR SHARI S. C. SHANG
INTERNATIONAL MBA PROGRAM, NCCU

2. Outline
 Introduction
 Overview on Smart Speakers and the Market
 International brands in the U.S. and European Markets
 Local brands in the China Market
 Business Model of the Tmall Genie Product Family
 Competitive Analysis of the Tmall Genie Product Family
 Porter’s Five Forces Model
 SWOT
 Recommendations
 Summary

3. Introduction SMART SPEAKERS AND THE
MARKET

4. Amazon Echo: the first smart speaker
 Amazon Echo is a smart speaker that connects to
the voice-controlled intelligent personal assistant
service Alexa
 Say the word ”Alexa”, and the device’s top glows
blue, awaiting your command.
 Hears you with far-field voice recognition
 Plays music from Amazon Music, Spotify, Pandora,
iHeartRadio, etc.
 Answers questions, reads the news, reports traffic
and weather, reads audiobooks from Audible
 Controls lights, fans, switches and compatible
devices from Philips, Samsung Nest, and others
 Allows purchasing by voice using default settings

5. New “Skills”
 Alexa provides a set of built-in
capabilities, referred to as skills.
 New skills may be added to provide
more capabilities like ordering a pizza
from Domino's or requesting a ride
from Uber
 Over 40,000 Amazon Alexa skills
worldwide

6. Market Overview (1/2)
(3.2MU)
(2.5MU)

7. Market Overview (2/2)
 As of early 2018, none of the international brands have announced a plan to
penetrate the Chinese market
 This might be due to the lack of Mandarin support or for political reasons
 The aim of this thesis
 Survey on major smart speaker products and virtual assistants in the market to learn from
international brands
 Alibaba is used to illustrate how a manufacture may develop its strategy to sustain the
business in the China market
 Other players should be able to develop their strategy in a similar way

8. Alibaba (1/2): Alibaba Group Holding Limited
 Multinational e-commerce, retail, Internet, and AI technology
conglomerate founded in 1999 that provides B2B, B2C, and C2C sales
services via web portals, as well as electronic payment services, shopping
search engines and cloud computing services.
 Orchestrated China's Singles' Day into the world's biggest online shopping
day
 Online sales and profits surpassed all US retailers (including Walmart,
Amazon and eBay) combined since 2015

9. Alibaba (2/2): Tmall Genie Products
2017.7
Tmall Genie X1
CNY￥499
99
2018.3
Tmall Genie M1
CNY￥299
2018.5
Tmall Genie
Fang Tang (方糖)
CNY￥199
89
2018.5
Tmall Genie
Kid Edition
CNY￥199
2018.5
Tmall Genie
TV Box
CNY￥399

10. U.S. and
European
Markets
INTERNATIONAL BRANDS:
AMAZON, GOOGLE, APPLE

11. Amazon (1/3)
2014.11
Echo
USD$99.99
89.99
2016.3
Echo Dot
USD$49.99
34.99
2018.5
Echo Dot
Kids
USD$79.99
2016.3
Echo Tap
USD$129.99
79.99
2017.10
Echo Plus
USD$149.99

12. Amazon (2/3)
2017.6
Echo Show
USD$229.99
149.99
2017.9
Echo Spot
USD$129.99
2018.6
Fire TV Cube
USD$119.99
2017.4
Echo Look
USD$199.99

13. Amazon (3/3)
Echo Button
USD$19.99
for 2
Echo connect
USD$34.49
Alexa Voice
Remote
USD$29.99

14. Google
2016.11
Google Home
USD$129
2017.10
Google Home
Mini
USD$4939
2017.12
Google Home
Max
USD$399

15. Apple
2018.2
Homepod
USD$349

16. Alibaba Amazon Google Apple
1st Product Launch
Time
July 2017 Nov. 2014 Nov. 2016 Feb. 2018
Virtual Assistant AliGenie Alexa Google Assistant Siri
# of Models 5 9 3 1
List Price (USD) $31, $47, $62, $78
$50, $80, $100,
$119, $130, $150
$49, $129, $399 $349
Platform Openness High High High Low
Special Features
(may available
only on selected
models)
Recharging
prepaid cards, DTS
sound
qualification, TV
box, Xholder
Echo accessories,
TV box, multi-room
music playback
YouTube Music,
interoperability with
Chromecast, free
calling in the U.S.
and Canada
Synchronized music
playback
Room-sensing
technology, deep
Apple integration,
multi-speaker
support
Target Segments
Children, Young
Adults, Elders,
Household Users,
Business Users
Children, Young
Adults, Household
Users, Business
Users, Fashion
People
Young Adults,
Household Users,
High-end users
High-end users
Xholder adds visual
recognition to
Alibaba’s smart
speakers

17. China Market LOCAL BRANDS: JD.COM, XIAOMI,
BAIDU, TENCENT

18. JD.com (1/2)
2015.8
DingDong A1
CNY￥798
DingDong A1X
CNY￥998
2017.7
DingDong Top
CNY￥399
2015.12
DingDong Q1
CNY￥199
2016.10
DingDong A3
CNY￥598

19. JD.com (2/2)
2017.7
DingDong 2
CNY￥799
599
2018.5
DingDong Mini2
CNY￥299
79
2018.5
DingDong Play
CNY￥1,899

20. Baidu
2017.12
Raven H
CNY￥1,699
2018.3
Xiao Du Zai Jia
(小度在家)
CNY￥599
2018.6
Xiao Du smart speaker
CNY￥249
89

21. Xiaomi, Tencent
2017.7
Xiaomi AI
CNY￥299
2018.3
Xiao Ai Mini
CNY￥169
99
2018.4
Tencent Tingting
CNY￥699

22. Alibaba JD.com Xaiomi Baidu Tencent
1st Product Launch
Time
July 2017 Aug. 2015 July 2017 Nov. 2017 Apr. 2018
Virtual Assistant AliGenie JD Alpha Xiao Ai DuerOS Xiaowei
# of Models 5 8 2 3 1
List Price (CNY￥)
$199, $299, $399,
$499
$199, $299, $399,
$598, $798, $799,
$998, $1,899
$169, $229
$249, $599,
$1,699
$699
Platform Openness High High Low High High
Special Features
(may available
only on selected
models)
Recharging
prepaid cards,
Xholder, DTS
sound, TV box
AR integration,
making voice
calls
Nothing special
but very
affordable
Multi-party video
call, Tymphany
speaker
integration
Premium
audio quality,
WeChat
integration
Target Segments
Children, Young
Adults, Elders,
Household Users,
Business Users
Children, Young
Adults, Household
Users, High-end
users
Household Users,
Low-end Users
Children,
Household Users,
High-end users
Household
Users

23. 2015H2 2016H1 2017H1 2018H1
2017.7
Xiaomi AI
CNY￥299
2018.3
Xiao Ai Mini
CNY￥169 99
2018.4
Tencent Tingting
CNY￥699
2018.3
Xiao Du Zai Jia
CNY￥599
2017.12
Raven H
CNY￥1,699
￥1,500
￥1,000
￥500
2018.6
Xiao Du smart speaker
CNY￥249 89
2017.7
DingDong 2
CNY￥799 599
2018.5
DingDong Mini2
CNY￥29979
2018.5
DingDong Play
CNY￥1,899
2015.8
DingDong A1 CNY￥798
DingDong A1X CNY￥998
2017.7
DingDong Top
CNY￥399
2015.12
DingDong Q1
CNY￥199
2016.10
DingDong A3
CNY￥598 2017.7
Tmall Genie X1
CNY￥499 99
2018.3
Tmall Genie M1
CNY￥299
2018.5
Tmall Genie Fang Tang
CNY￥199 89
2018.5
Tmall Genie Kid Edition
CNY￥199
2018.5
Tmall Genie TV Box
CNY￥399
2016H2 2017H2 2018H2
Smart Speaker Prices in
the China Market

24. Business Model BUSINESS CANVAS OF
ALIBABA

25. Key Partners
• Brands/platforms
manufacturing
AliGenie
compatible smart
devices
• Enterprises (hotels,
airline lounges ,
etc.)
• Hardware
manufacturers
Cost Structure
• Product manufacture cost
• AliGenie R&D and maintenance
cost
• Content/copyright purchase
Revenue Streams
General Users
• Selling Tmall Genie family products
• Voice-driven shopping
• Personal data shared
Key Activities
• Cutting edge voice
recognition (in
Mandarin) and AI
• Necessary support
to build the
ecosystem
Key Resources
• Voice assistant
AliGenie
• Taobao andTmall
• Alipay
• Developers’
website
Value
Propositions
Allow users to get
their jobs done in a
more convenient and
natural way using
voice interactions
Customer
Relationships
• Tmall Genie App
• Taobao account
• Build its own
ecosystem
Channels
• Four experience
stores in China
• Online stores
Customer
Segments
People who
• Prefer using oral
commends instead
of fingers to do
things
• Interested in smart
homes
• Open to use the
smart speaker as a
babysitter
• Would like new
technology to
assist elders’ life
Enterprise Clients
• Customization service fee
• Rental fee
• Subscription fee
Developers
• Platform licensing fee

26. Competitive
Analysis of the
Tmall Genie
Product Family
PORTER’S FIVE FORCES AND
SWOT ANALYSIS

27. Industry
Rivalry
Threat of
substitutes
Bargaining
power of
customers
Threat of
new
entrants
Bargaining
power of
suppliers
Porter’s Five
Forces Model
The market is in a
price war &
competition is very
intense
Driving force is the
virtual assistant service
Foreseeable threat from
substitutes is low
High
2018.5
Fang Tang CNY￥199 89
2018.6
Xiao Du CNY￥249 89
Limited; Alibaba holds
AliGenie; hardware spec
not the latest.
JD.com is potentially the
toughest
BATX are already in the
market!

28. SWOT Analysis
Strength
 The largest retailing company in the
world
 Alibaba Cloud is the largest cloud
computing company in China
 DingTalk is the most popular team
collaboration and communication
platform in the business sector in China
Opportunities
 Sell more to consumers by collecting
more personal information and
providing more accurate shopping
recommendation.
 Provide AliGenie over Alibaba Cloud to
generate revenue
 Take the advantage of DingTalk and
provide smart office applications for
corporate clients
Weakness
 High discounts on products
 Lack of direct income by providing
AliGenie service
 Lack of native penetrations (e.g.
operating system) on mobile platform
(e.g. cell phone, tablet)
Threats
 Dropping profitability
 No direct revenue to sustain the
business in a long run
 Unable to provide best integration/user
experience on mobile platforms

29. Recommendations
INDUSTRY TRENDS AND
COMPETITIVE ADVANTAGE
ESTABLISHMENT

30. Observation on Industry Trends
 Screen and camera are essential to higher priced smart speaker product
 DingDong Play, and Xiao Du Zai Jia
 Further classification on market segments
 Smart speakers for kid, elders, fashion people, etc.
 Critical to have some unique resource: Taobao, WeChat, YouTube, etc.
 High-end smart speaker products are not widely accepted
 Raven H, Homepod
 Corporate clients are becoming the potential sources to generate stable
revenues
 Alexa for business

31. Strategy Recommendation (1/3)
 Superior Quality
 Adding screens and cameras
to provide value added
services
 Synchronized sound playback
 Accurate voice recognition is
very critical to business users
 Achieve 99% voice recognition
accuracy rate
 Superior Innovation
 Carry out more sophisticated
conversations (e.g. Google
Duplex-like style)
 Provide alternatives to users
 More accessories to
differentiate with others (e.g.
Xholder)
 Headphone is a good
candidate

32. Strategy Recommendation (2/3)
 Superior Customer
Responsiveness
 Collect more data and provide
more accurate
recommendation
 Focus on niche markets and
identify needs from different
segments and combine with
other services
 Free cooking videos with
suggested shopping lists
 Superior Efficiency
 Standardize the components
to improve manufacturing
efficiency
 Big data analysis to adopt just-
in-time inventory management
and reduce inventory and
increase capital efficiency

33. Strategy Recommendation (3/3)
 Other Recommendation
 Paid skills/subscription
 Provide AliGenie over Alibaba Cloud to generate revenue
 Provide smart office applications for business users to generate long term revenue
 Collaborate with leading cellular phone brands including Huawei, vivo, and OPPO to
have native penetrations on mobile devices
 Alibaba may collaborate with Baidu: once a new Tmall Genie product comes with a
LCD display, it will be able to show voice search results as well as advertisements
 Licensing to 3rd platforms (e.g. acre, ASUS in Taiwan) for different market penetrations

34. Summary

35. Summary
 Comprehensive study on the major smart speaker product in the
market
 Business canvas is used to analyze Alibaba’s business model
 Porter’s five forces model is used to provide an overall analysis on
the Industry
 Use SWOT to identify Alibaba’s business competition
 Recommendations on Alibaba’s strategy to build competitive
advantage: superior efficiency, superior quality, superior customer
responsiveness, and superior innovation and the result of SWOT
analysis

36. Thank you
Q&A

37. Interaction with Alexa
 Understanding and responding to your
questions in seconds
 Amazon processes and retains audio,
interactions, and other data in the
cloud
 Examples
 You: “Alexa, how tall is Mount Everest?”
 Alexa: “The height of Mount Everest is
8,848 meters”
 You: “Alexa, set a timer for eight
minutes.”
 Alexa: “Eight minutes, starting now.”
 Allows purchasing by voice using your
default payment and shipping
settings
 Shopping example:
 You: “Alexa, add wrapping paper in
the shopping list”
 Alexa: “I have added wrapping paper
in your shopping list”
 You can require a speakable
confirmation code, turn off voice
purchasing, and see product and
order details in your Alexa app