The Information reported last week that an Alibaba smart speaker launch is planned for China as early as this week.
While details aren’t known, the device could allow Chinese consumers to buy goods from Alibaba’s shopping sites using a voice-activated virtual assistant, just as Americans can use the Alexa virtual assistant on the Echo to order things on Amazon. The Alibaba virtual assistant was developed by the company’s artificial-intelligence research teams in China, the people said. The product, which understands voice commands in Chinese, is targeted solely at domestic consumers who are already familiar with Alibaba’s online services. That means it won’t likely be released in the U.S.
Alibaba Looks to Amazon for Ideas, Not Competition
It is easy to focus on how this impacts Amazon, but that analysis seems misplaced at least for the near term. There have been no indications that Amazon is working on a Chinese language model for its Alexa voice assistant. A popular Echo might help Amazon’s position in China, but the company has very limited reach in the country unlike the other markets it has already moved into with Alexa: U.S., UK and Germany.
An analysis by iResearch China reported earlier this year by Business Insider showed that Amazon has only a 0.8% market share in China. By contrast, Alibaba Holdings’ Tmall.com commands 56.6% of Chinese online spending.
Amazon is growing quickly in China and last year it rolled out a limited availability for Prime. However, Alibaba is more likely to look to Amazon for ideas on how to grow its online business than to consider it an important local competitor.
This Is About Tencent and Baidu, Not Amazon
This is about competition, but it is shaping up as a typical clash between China’s big three internet giants: Alibaba, Tencent and Baidu. Number two in online retail market share in China is JD.com. Last year Tencent became the largest shareholder in JD.com with a 21% stake according to Nikkei Asian Review. JD.com also introduced a smart speaker that speaks both Mandarin and Cantonese in November 2016 called LingLong DingDong.
Both Alibaba and JD.com / Tencent surely recognize that Amazon increased sales to existing customers after they purchased an Echo. Given that these companies are number one and two in market share, it seems clear that this is the first battlefront in the Chinese voice assistant wars.
In addition, Baidu launched its own voice assistant device in May called Xiaoyu or “small fish.” This is more than a smart speaker since it has a screen like the Amazon Echo Show. Baidu is the country’s top search engine and wants to continue to control that consumer connection in addition to exploiting online commerce opportunities. There is little doubt that Alibaba is tracking this development closely.
Back in the US it is easy to see Alibaba’s voice assistant ambitions through the prism of Amazon or even Google because they were first movers in this space and have such dominant positions in the West. However, the real battle for Alibaba is with its traditional rivals at home. The Chinese battle for smart speakers and voice assistants will be just as fierce in China as it is in the US. But, it will involve a different set of competitors.