Will discounts on smart speakers give Baidu a toehold in the market for AI-enabled devices?

PUBLISHED : Tuesday, 12 June, 2018, 7:31am
UPDATED : Tuesday, 03 July, 2018, 7:26pm

Baidu, China’s dominant internet search engine operator, has unveiled its third voice-activated smart speaker in eight months, selling it at a fraction of rivals’ prices as it grapples for a toehold in the world’s most competitive consumer market.

The Xiaodu, released yesterday in the Chinese capital, sells for a discounted price of 89 yuan (US$14), about two-thirds cheaper than its normal retail price of 249 yuan. The entry-level model, which can play “over 7,000 music tags” to fit different scenarios or moods, is the cheapest model compared to those made by Xiaomi, Alibaba, or Cheetah.

The smart speaker is empowered with artificial intelligence (AI), a major area of focus for Baidu and its division in autonomous driving, which enables it to be “individualised after 30 days of use,” said Baidu’s smart living group (SLG) general manager Jing Ku. “The most you use [the speaker], the better it will understand you.”

The Chinese company is a latecomer among voice-activated smart home devices, a US$14.7 billion global market dominated by Amazon’s Alexa and Echo, Google’s Home and Apple’s HomePod in the English-speaking world. None of the global brands have made a dent in the mandarin Chinese-speaking market, where more than 100 companies are developing smart speakers.

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Baidu had ventured into the crowded market before, with its 1,699-yuan Raven H smart speaker in November, the seen as the centrepiece in the company’s takeover of Beijing start-up Raven Tech.

The device, at triple the price of Alibaba’s smart speaker and four times the price of a Xiaomi model, sold fewer than 10,000 units, according to a report in The Information website. Alibaba is the parent company of the South China Morning Post.

Some engineers were told to stop working on the speaker, while internal disagreements raged on whether to sell a high-end device or a mass-market model, the website said. Baidu declined to comment on speculation that Raven’s founder Lyu Cheng is leaving the company.

Three months earlier in March, Baidu’s founder and chairman Robin Li Yanhong launched a mid-range smart speaker called the Xiaodu Zaijia, with a sticker price of 599 yuan.

The latest entry-level model also has a child mode for interactions with children, and a “geek” mode for continuous conversation, without having to mention wake-up words every time to make queries.

Still, the success or failure of smart devices depends on the depth and breadth of the product’s content set, said Sun Mengqi, an analyst with Bank of Communication International Holdings.

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“Smart speakers must be able to satisfy users’ needs to be sticky,” Sun said. “While most turn to speakers for music and Tmall’s Genie to help with shopping, those [products] with better resources in content will have the edge.”

“It remains to be seen whether Baidu can have a vast outreach with home appliance developers and enable its smart speakers to serve as the control hub,” Sun said.

Baidu has partnered with Haier to remote control its home appliance devices via the speaker, and is working toward a similar tie-up with Chinese TV giant Skyworth, according to Jing.