China’s search giant Baidu has surpassed Google as the world’s second-largest smart speaker seller during the second quarter after its sales surged 3,700% annually to 4.5 million units, according to a new report from research firm Canalys.

Why it matters: In the two years since smart speakers first debuted in the domestic market, it has evolved from a niche gadget into one of the most popular electronic devices in Chinese households.

  • The popularity of the device has raised major Chinese technology companies such as Baidu, Alibaba, and Xiaomi to top-ranked spots in the global smart speaker market.
  • China’s smart speaker market growth has outstripped other countries. Shipments reached 12.6 million units in the second quarter, more than twice that of the US with 6.1 million units, said the report.

Details: The global smart speaker market grew 55.4% year on year in the second quarter to reach 26.1 million shipments, said the report.

  • Amazon continued to lead the market with 6.6 million units shipped in the quarter, while Google fell to third place with 4.3 million units.
  • Other top players include China’s Alibaba and Xiaomi, with 4.1 million and 2.8 million units shipped during the quarter, respectively.
  • Canalys attributed Baidu’s growth to the popularity of its smart displays, the smart speaker with screens that accounted for 45% of the products it shipped.

“Local network operators’ interests on the device category soared recently. This bodes well for Baidu as it faces little competition in the smart display category, allowing the company to dominate in the operator channel.”

—Cynthia Chen, Canalys research analyst

Context: The growth of the Chinese smart speaker market has been a result of a price war between these Chinese vendors that slashed the average price for the gadget to below $20.

  • Baidu entered the market in November 2017 when it launched its Raven H smart speaker priced at RMB 1,699 (around $237.4), nearly 10 times more expensive than Alibaba and Xiaomi’s offerings at the time.
  • The product failed to gain a foothold in the Chinese market. It was reported that Baidu only manufactured 10,000 Raven H smart speakers in sharp contrast to the several million units sold by both Xiaomi and Alibaba.
  • It unveiled its Little Fish smart speaker brand in March 2018, which sold for as low as RMB 89 (around $13).

Writing about semiconductors and telecommunications.

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