Baidu pulls out of Chinese smart speaker price war as it gains market share against Alibaba, Xiaomi

Unlike past product launches, Baidu’s latest smart speaker did not come with a large discount

The Beijing-based search engine operator is now third globally in terms of smart speaker market share, and is shifting its strategy away from low-priced devices

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Baidu's newest smart speaker, Xiaodu Zaijia X8, was announced without the steep discounts that came with previous product launches. Photo: Baidu

Published: 6:30am, 18 Dec 2019Updated: 6:30am, 18 Dec 2019

China’s leading internet search engine operator Baidu has cut hefty subsidies on its smart speaker products as it gains market share in the country’s smart speaker market.

Baidu launched its latest smart speaker Xiaodu Zaijia X8 – which features a built-in touch screen – on December 12, the date of the “Double 12” shopping festival which is one of China's most celebrated online shopping days.

At the product launch, the official price of 599 yuan (US$86) remained onscreen the entire time; unlike at previous launch events, Baidu vice-president Jing Kun did not step forward to announce a massive discount toward the end.

The Beijing-based company and fellow Chinese tech giants Alibaba and Xiaomi all launched their first smart speakers in the second half of 2017. With the product still relatively novel to Chinese consumers despite the debut of Amazon’s Echo three years before, the companies used heavy subsidies to attract users and gain market share from the start. The price war continued for some time – last year, Alibaba’s cheapest smart speaker model sold for as low as 99 yuan, while Baidu offered a model at 50 per cent off the original price of 599 yuan. (Alibaba is the parent company of the South China Morning Post.)

But Baidu’s recent change in strategy may be a signal that the battle for market share at any cost is cooling, and companies are starting to look to increase revenue instead.

“At the start we needed huge discounts for users to accept smart speakers,” Jing said last week at a media briefing. “Often, price is a barrier for consumers when they do not understand the value of a product. But when you understand its value, the price is no longer a barrier.”

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