Why 2018 Will Be the Year of the Smart Speaker

By just about any measure, smart speakers had a terrific 2017, with unit volumes in the U.S. more than tripling to 25 million for the year, according to the Consumer Technology Association (CTA). Smart speakers were popular gifts last year, with 11 million smart speakers sold in the holiday quarter alone.

The CTA puts on the Consumer Electronic Show (CES) each year, which took place last week and saw Amazon.com's (NASDAQ: AMZN) Alexa and Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Assistant enjoying countless integrations in products even beyond smart speakers. 2018 is going to be another big year for smart speakers. The CTA expects U.S. sales to jump to 36 million for 2018, helped in part by Apple's (NASDAQ: AAPL) delayed entry with its $349 HomePod.

Survey says

NPR and Edison Research have also just released some fresh estimates now that the 2017 holiday shopping season is in the rearview mirror, and 16% of Americans -- approximately 39 million people -- now own a voice-activated smart speaker. Amazon expectedly led the way in terms of ownership (11%), followed by Google (4%). Over the holidays, 7% of respondents received a smart speaker, with 4% of respondents receiving their first smart speaker.

NPR/Edison's findings also include implications for other product categories. Consumers naturally use their phones a little bit less once they get a smart speaker since the device can accomplish some of the same tasks like streaming music or looking things up on the internet, but 30% of smart speaker owners say they even spend less time watching TV now.

A whopping 64% of people said they would be interested in having some of the same technology in their cars. Slowly but surely, tech giants have been attempting to partner with automakers to integrate their virtual assistants, but the auto market moves at a glacial pace compared to consumer electronics. For example, Toyota just announced today that it would (finally) support Apple CarPlay, which leverages Siri, in 2019 Toyota and Lexus models.

Smart speakers are also proving to be instrumental in driving the adoption of smart-home technology as well, with 31% of respondents using smart speakers to control a smart-home device in the preceding week, and 38% of owners planning on buying even more smart speakers in order to control smart-home gadgets.

The market could break 50 million units

Earlier this month, market researcher Canalys predicted that the global market for smart speakers will soar to over 56 million units, heavily concentrated in the U.S. (expected to account for 38 million out of the global total). Canalys Research Analyst Lucio Chen added, "Smart speaker uptake has grown faster than any other consumer technology we've recently encountered."

Chen also pointed out that the market is evolving as companies continue searching for new ways to monetize all that usage. Importantly, adoption has to come first before companies can innovate on new revenue models, and there's no doubt that smart speakers are here to stay.

10 stocks we like better than AmazonWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 2, 2018

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.