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Amazon Looks to Smart Speaker Market for Revenue Diversification

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Amazon’s battling increased e-commerce competition

Growing competition in the smart speaker market poses a threat to a critical source of new revenue for Amazon (AMZN). As Amazon comes under increased e-commerce competition, it’s seeking to both strengthen its e-commerce play and look for new revenue streams beyond the e-commerce industry.

After Walmart (WMT) acquired Jet.com last year for $3.0 billion, competition has increased for Amazon in the United States (SPY). Alibaba (BABA) and eBay (EBAY) are challenging Amazon abroad where. For example, they’re backing Amazon rivals in India (INDA).

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$10 billion potential Alexa revenues

Amazon is banking on its Echo devices to help boost its e-commerce sales and unlock new revenue streams. According to an RBC Capital Markets report released early this year, Alexa-based products such as the Echo smart speaker could generate more than $10.0 billion in new revenue for Amazon by 2020.

According to eMarketer, Amazon controls more than 70.0% of the US smart speaker market compared to 24.0% for Alphabet’s Google. A strong market position would be crucial to Amazon’s ability to attract more Alexa-related revenues.

Rivals vying for Amazon’s market share

Competition in the smart speaker market has escalated in recent months. Alphabet’s (GOOGL) Google has expanded its product range, and Apple (AAPL) has announced its HomePod. These rivals are all vying for market share. More than 24.5 million voice-controlled devices such as the Echo are expected to be shipped this year, according to VoiceLabs.

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