Mobvoi’s Li Zhifei: Stand Back When Giants Battle in the Smart Speaker Market

2017 was supposed to be the year China’s domestic smart speaker market broke out. Alibaba, Xiaomi, JD.com, Rokid, Mobvoi and Himalayas all launched intelligent speakers. But with Xiaomi flooding the market with its 299 yuan AI speakers and Alibaba and JD.com competing on price, the domestic smart speaker market does not look optimistic.

How can a start-up survive in the smart speaker market when facing a price war and subsidies from Internet giants?

Mobvoi is a startup in the smart speaker market. In mid-September, it unveiled its smart speaker box, 999 yuan unit with great sound and intelligente features. Today, Mobvoi held a press conference to talk about smart speakers, its view of the market and how it plans to survive while surrounded by giants.

At the meeting, Mobvoi published its users report, including a user portrait, habits, application scenarios and household control information. For more information, text “users report” to the Mobvoi WeChat official account.

SEE ALSO: Mobvoi Launched New Smart Speaker Tichome

Betting on Voice Controls

While the outside market remains hesitant, Mobvoi has gone all-in on voice interaction. Mobvoi founder Li Zhifei said small form factors, screen-free designs and no physical controls are the trend. Miniaturization will make smart devices more portable and screen-free designs will become ubiquitous. These trends will push voice control into the mainstream.

“Voice interaction will account for 30 percent of human interaction in the next three to five years,” Li said. Future human-computer interaction will not give priority to voice, but more likely a combination of elements such as touch screen, voice and gesture. Li said he has a positive attitude toward voice interaction and believes 30 percent of human interaction will remain voice based.

How did he decide to focus on voice interaction? Li was inspired by the daily voice interaction between users on different devices. While voice accounts for less than 4 percent of mobile phone controls, it accounts for 25 percent of smart watch control and 90 percent of Google Glass control.

Although Google Glass was not a commercial success, it demonstrated the case for voice control. It did not have a dedicated display and was inconvenient to touch, which meant voice was its most important point of interaction. This shaped the product strategy for Mobvoi.

Li also talked about three strategies for making AI consumer products. One is to add voice interaction to hardware products to bring value-added services that utilize AI. The second is to cultivate market demand. There is little potential in a mature product category such as mobile phones. It’s unrealistic for a start-up company to define a new category by itself, so Mobvoi focused on emerging products. The third is product collaboration, which means connecting and interacting with various hardware through a common virtual assistant, which is another unique feature of Mobvoi.

After years of exploration, Mobvoi made several products such as a watch, a car rear-view mirror and speakers.

In response to the smart box, released more than a month ago, Li said the past was mainly “filling gap” when asked about the company’s progress. For instance, Mobvoi improved connections with QQ music, smart home controls and user feedback systems.

In addition, Li also talked about the sales volume of the speakers: “50,000 units is not a problem.” Through initial crowdfunding and sales, Mobvoi has sold 10,000 units in China and received tens of thousands of orders from foreign markets.

Surviving Under Giants

As a startup company, Mobvoi needs to invest in developing its sales channels, after-sales logistics and new products. How can it survive among giants?

It’s a position Li said left him feeling both helpless and hopeful. The helpless part is because startups face an uphill battle in bringing products to launch while larger companies have established sales channels and the cash reserves needed to compete on price. He felt hopeful because the giants are burning money to educate the market. In the long run, the market will be promising and have room for development.

“When two giants are in the fight, we stay out and develop our products. We want our products to do well and we have a good attitude. In the history of consumer hardware, no company has been able to monopolize the market. We only need to differentiate ourselves and stay competitive,” Li said. Although startups and others will struggle in the short term, in the long term the giants’ investment is good for the market. Startups should focus more on their products and differentiation. Product differentiation is Mobvoi’s first move. The second step is differentiation of their business model, which is to explore the international market.

The mature product category of smart phones shows the Chinese market accounts for 30 percent of the world market. But in smart watches and smart speakers, we can see China occupies only 6 percent of the world market. And in intelligent speakers, China only accounts for 1 percent of the market – North America occupies 76 percent.

The domestic intelligent speaker market is still in its early stages, and the market is wide open. If we just bet on the domestic market, how can we obtain sales volume and survive among the giants, Li said? AI electronics must walk on internationalized path.

Internationalization is also advantageous to Mobvoi about. As a Google-invested startup company, it maintains strategic cooperation with Google. Mobvoi can easily enter the international market via Google Assistant as long as it has a good product.

What Opportunity for Start-Ups?

For intelligent speakers, Li has a long-term road map to differentiate his products and plan an international layout. Could it offer any reference to other players?

For other start-ups that want to enter intelligent speaker market, they must consider carefully before producing their hardware. There is a long cycle and high cost in research and development It is also very difficult to mass produce and control the price of hardware. That may be Mobvoi’s lesson.

“If you do hardware via AI, Chinese enterprises still have a lot of opportunities,” Li said, “China’s supply chain ability is very strong and our engineers are hardworking. Our cost controls, product design and brands help us when going abroad. China’s enterprises still have a good chance.”