A few weeks ago, both Alibaba and Baidu unveiled their smart speakers and voice platforms, DuerOS, sparking excitement in the market. However, recently, numerous headlines proclaiming the "best" articles about the smart speaker market have surfaced on the internet. These articles generally suggest that the smart speaker market is booming, and MediaTek might seize this opportunity. But is the smart speaker market truly set to explode, and could this be MediaTek's second chance?
After reading these market analysis pieces, we noticed that the descriptions of the smart speaker boom and MediaTek's rising shipments all included the word "to be." Perhaps the smart speaker market's "to be" hot is merely wishful thinking.
In the smartphone market, MediaTek's continuous attempts to break into the high-end segment have failed, and its mid-to-low-end market share has gradually declined. This has left the company in a somewhat dire situation. A string of negative news, including declining revenues and unexpected layoffs, has left the pressing question of how MediaTek can find its second spring.
Currently, apart from smartphones, any other market seems like a "life-saving straw." The smart speaker, which is widely favored by public opinion, appears to be just that.
Recently, some media outlets cited sources claiming that major smart speaker manufacturers, including Google, Amazon, and Alibaba, are planning to purchase MediaTek chips. According to an article published on Taiwan’s e-Times website, MediaTek has already received chip orders from Amazon's next-generation Echo speakers and Google's smart home device, "Google Home." Additionally, the website mentioned that in the second half of the year, Tencent and Xiaomi are expected to launch their own branded smart speakers, which are also anticipated to use MediaTek chips.
This analysis suggests that chip orders from smart speaker manufacturers will boost MediaTek's third-quarter results. Some optimists even believe that MediaTek's chip (and solution) shipments for smart speakers will double this year and double again next year.
However, is the seemingly popular smart speaker market really a chance for MediaTek to make a comeback? I’m afraid it’s not that simple.
Virtual Boom in the Smart Speaker Market
Amazon Echo
Currently, smart speakers interact with smart voice-activated devices like TVs, becoming a hot topic for AI entering households. The industry seems to agree that in the future of artificial intelligence, smart speakers will most likely become the most important entry point. Amazon’s Echo and Google’s Google Home have taken the lead, while Apple’s HomePod, Microsoft’s Invoke, Facebook, and even Samsung are silent. Although the domestic market started later, with JD.com, Himalaya Xiaoya, and Tmall Genie X1 launching new products, a large wave of new products is also on the way.
According to Strategy Analytics, global shipments of smart speakers in 2016 were 5.9 million units, which is expected to increase tenfold by 2022, reaching a market value of $5.5 billion.
However, the emergence of smart speakers in the Chinese market is just a "buzz," not yet driven by strong demand. In this largest consumer electronics market in the world, smart speakers are just like other trendy industries, currently seen by giants as the next hurdle, and all manufacturers are embracing them. This seems exactly the same as the previous "Hundred Regiments Offensive," "Internet Mobile Wars," and "Bicycle Wars." Many people rush in, but there may be very little left.
Will smart speakers definitely become the entrance to the artificial intelligence era? No one can be sure, and it is difficult to predict this within at least 5 to 10 years.
In this regard, Liu De, co-founder of Xiaode, pointed out: "For the next 10 or 15 years, the mobile phone will continue to monopolize the smart home sector. However, with technological advancements in the next decade, it is very possible that all smart devices will become portals since they will all be networked and intelligent. 'When a lot of hardware in the home becomes smart entrances, this entrance must be decentralized and decentralized.'"
Similarly, the Tmall Elves did not engage in a head-to-head battle. The person in charge at the press conference also emphasized that what Alibaba sees is the future evolution of Tmall Genie in the field of smart hardware. Therefore, judging from the current market conditions, most manufacturers have chosen to follow the trend and align with the major forces. Regardless of whether smart speakers will be the final entrance, whoever remains after the dust settles will make the test.
Smart Speaker Chip Pioneer
Then back to the chip inside the smart speaker, the Internet and smart hardware vendors are betting on the potential future market demand. It is reasonable that MediaTek took the lead in this area.
At this year's MWC Shanghai show, MediaTek launched its first single-chip MT2625 NB-IoT system, along with China Mobile releasing the smallest NB-IoT universal module. At the next Google I/O Developer Conference in May, it introduced the system-on-a-chip MT8516 designed for intelligent voice assistant devices and smart speaker products, stating that current products like Elves, Essential Home, and Lynx X1 all use this chip.
After this year's MediaTek 2017 shareholder meeting, the company’s chairman, Cai Mingjie, told reporters in an interview: "MediaTek is one of the leading chipmakers for Amazon's smart speaker Echo, accounting for more than half of the shipments." In addition, according to MediaTek Deputy General Manager and General Manager of the Home Entertainment Products Group, nearly 80% of the chips in the smart speaker market in 2016 were supplied by MediaTek.
For the future intelligent speaker market, visitors Jie is very optimistic, he said MediaTek's family entertainment business group, last year's revenue accounted for about 20% of MediaTek's total turnover. With the market improving, this year's revenue is expected to rise to 25%.
It seems that all of this is good news for MediaTek, but the problem is that competitors won’t let MediaTek take the whole pie.
Those Opponents
Faced with the rapid expansion of the smart speaker market, Qualcomm, Ziguang Zengrui, and Intel are also actively preparing for the game, hoping to get a slice of it.
Last month, at a developer event in Shenzhen, Qualcomm officially launched its "Smart Audio Platform." Besides the chip itself, Qualcomm provides developers with more development tools on this new platform. The purpose is clear: to encourage developers to use these tools to build hardware products like Amazon Echo faster.
Both new models released by Qualcomm support Google Assistant and Amazon Alexa. They can also support voice recognition, Voice over Internet Protocol (VoIP), and other functions. Clearly, their offensive goals in this market are evident.
Moreover, Intel, which has been overlooked in the mobile chip space, is also fighting hard. At the Amazon Developers Conference at the end of last year, Intel launched a very high-profile "Smart Home Hub" smart speaker based on Amazon Alexa. Intel said it hopes to use this as a reference design, allowing more third-party hardware vendors to learn from it.
Meanwhile, Ziguang Zengrui's smart speaker products, featuring the company's chips, have been shipped on a large scale and are beginning to vigorously harvest the low-end smart speaker market under 300 yuan. A spokesperson for Ziguang Zengrui said: "At present, we have around dozens of speaker customers, mainly smart and Bluetooth speakers within 300 yuan. The price of the chips is very competitive."
Facing competition from rivals, how can MediaTek avoid repeating the same mistakes in the smartphone market in the smart speaker market?
The Smartphone Market is Still Safe
Lynx Elf X1
From drones, robots, VR, AR, to today's smart speakers, the tech industry has never lacked outlets, but these outlets often burn out too fast, and very few can truly make a significant impact.
Faced with the fiery expectations of smart speakers, large and small players and capital will flow in one after another. Under the mobilization of capital, the industry is likely to be the same as the previous VR industry. After the market quickly heats up, it quickly disintegrates and finally enters a tepid phase. The steady development period. It is likely that the smart speaker market will return to a niche like VR and AR.
If it is only a niche market demand, even if the vast majority of chips are using MediaTek products, the weak market size can hardly compensate for MediaTek's decline in the smartphone chip market. Moreover, the bright market prospects of the Internet of Things cannot solve the immediate needs of the current smartphone market.
After failing to explore the high-end with the Helio X series and seeing the P series gradually decline after occupying the low-end market for half a year, the upside is unfavorable. MediaTek still needs to address the pressing issue in the smartphone market.
According to MediaTek's recent May 2017 operational announcement, the monthly revenue was only NT$18.437 billion (approximately RMB 4.16 billion). Although it was up 3.9% from the previous quarter, it was down 25.2% year-on-year. More serious than the decline in revenue, MediaTek’s processors have now been labeled as low-end in the smartphone space. This dilemma is difficult to reverse in a short time.
It is not a wise decision to hype up the smart speaker market. For MediaTek, whose gross profit margin has fallen below 40%, compared to the market where the prospects of smart speakers are still uncertain, the primary task is to reclaim more market share by owning the "low end" label in the smartphone market.
Perhaps, the upcoming annual flagship chip Helio X30 will become the only means for MediaTek to counterattack. The Meizu Pro 7 equipped with the MediaTek Helio X30 will soon be released. If this card can be played well, the "real high-end chip" in its mouth may bring a great improvement to the development.
This year, it's either the high-end smartphone market or the entrance to smart homes in 5 to 10 years. The face of MediaTek is probably a single-choice question.
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