AI can't save smart speakers.
“Xiaomi AI Speaker”, “Baidu Xiaodu”, how long has it been since you last called them?
The smart speakers, regarded by tech giants as the entry point to the home ecosystem, are not selling well. According to the latest data from Lotu Technology, in the third quarter of 2025, the total-channel sales volume of smart speakers in China was only 3.057 million units, a year-on-year decline of 11.9%, and the decline rate further widened compared with 5.6% in the first half of this year.
Image source: Lotu Technology
Specifically, this is already the fourth consecutive year of sales decline in this market. Previous data showed that the annual sales volume in 2024 was 15.7 million units, a year-on-year decline of as high as 25.6%. It is even predicted that the annual sales volume in 2025 will further decline by 9.6% to 14.2 million units.
Ironically, the continuous decline of the smart speaker market happens precisely at a time when large AI models claim to reshape the Internet of Everything. However, AI seemingly fails to illuminate the trough of the smart speaker market but instead reflects the embarrassment of the industry. So, the question is, why can't even AI save the smart speakers?
Why aren't smart speakers selling well?
At present, the prices of high-end AI speakers are rising. Although the average product price has increased to 280 yuan, a year-on-year increase of 8.9%, this still cannot reverse the overall decline of the market. Manufacturers try to break through with “high-endization”, but as consumers, we haven't opened our wallets because of the “smarter” products. The increase in the average price has not driven the growth of sales, indicating that the market is still highly sensitive to prices.
Actually, the rapid growth of the early smart speaker market was largely due to price subsidies and consumers' sense of novelty. In 2019, the year-on-year growth rate of smart speaker sales reached as high as 125%. At that time, brands such as Xiaomi and Tmall Genie quickly occupied the market through subsidies and “price wars”.
However, this also led to premature market saturation and serious product homogenization. Hundred-yuan basic smart speakers flooded the market, with highly similar functions, appearances, and pricing. Coupled with the low technical barriers of smart speakers, it is difficult to make breakthroughs in the functional experience. Whether it is the poor experience of low-end products or the lack of competitiveness of high-end products in terms of sound quality compared with professional speakers, the use value of smart speakers has not significantly improved over time.
In addition, major giants have built their own ecosystems. Xiaomi speakers have difficulty controlling Huawei home appliances, and Tmall Genie cannot be linked with Baidu's devices. Consumers need to purchase additional gateways to achieve cross-brand connection, which directly raises the use cost. While mobile phones and smart watches only need to download apps to freely control electrical appliances of different brands, directly replacing the smart speaker's position as the “ecological hub” of the home.
Facing these difficulties, large AI models are regarded by manufacturers as “the hope of the whole village”, but the reality may be much more cruel than the ideal.
In the third quarter of this year, the sales penetration rate of large model technology in smart speakers has reached 33%, becoming the core driving force for promoting product differentiation competition. Manufacturers continue to launch new products equipped with large models, and various functions such as AI health monitoring and customized scenarios are constantly emerging.
But the problem is, do these fancy functions really hit the pain points of users? In fact, for most families, the core needs of smart speakers are still music playback, information query, and simple home appliance control. And some high-end models emphasizing “companionship” and “care” have magnified the users' experience gap due to the uneven implementation of technology.
Some industry experts point out that the current AI empowerment still stays at the stage of “function stacking” and fails to solve the core pain points. As Xing Xinzhu of the Beijing Academy of Sciences said, enterprises mostly develop products based on technical capabilities rather than the real needs of users, resulting in “seemingly showy functions that are actually useless”, which is similar to the “pseudo-intelligence” controversy when smart speakers first emerged.
Therefore, the upgrade of the smart experience brought by large AI models doesn't seem to have created enough purchasing desire among consumers.
The dilemmas of leading smart speaker brands
Lotu Technology pointed out in the report that the Chinese smart speaker market is a highly oligopolistic market. For a long time, the combined sales share of the top three brands, Baidu, Xiaomi, and Tmall Genie, has remained above 90%. In the third quarter of 2025, the occupancy rate increased again to over 97%.
However, there are actually differences in market performance among these leading brands.
Image source: Lotu Technology
Xiaomi ranks first with a share of 48.8%. However, the average price of Xiaomi speakers has long hovered in the mid - to low - end range. To maintain its market share, Xiaomi has to maintain a low - price strategy, and the entry - level products are even priced at less than 100 yuan. Even though Xiaomi has launched the 2,000 - yuan Xiaomi Sound 2 MAX, it is difficult to change users' stereotyped impression of its “cost - effectiveness”. In addition, some users feedback that they choose Xiaomi speakers mainly to adapt to the ecosystem. Once the attractiveness of the ecosystem weakens, for example, when smart home devices can also be controlled through mobile phones, the role of the speaker will be downgraded from “hub” to “accessory”, and the sales will be directly affected.
Baidu Xiaodu was once the benchmark in the smart speaker industry. Relying on the DuerOS system, it occupied the market in the early stage. In 2023, it ranked first in shipment volume with a share of over 40%. However, its downward trend has been very obvious since 2025. Although Baidu maintained a 32.8% share in the third quarter with the increase in sales of new products with screens, some analyses believe that apart from upgrading the screen size and built - in applications, Baidu lacks breakthrough functions. At the same time, compared with Xiaomi's hardware matrix and Huawei's HarmonyOS system, Baidu's ecological synergy ability is weak, and user stickiness is insufficient.
Among these leading brands, Tmall Genie has had a tougher time. It can be seen that Alibaba's enthusiasm for smart speakers has significantly decreased. Due to the slow update and iteration of technology and new products, the competitiveness of Tmall Genie has gradually declined, and its market share has continuously dropped. The sales occupancy rate in the third quarter was about 16%. Tmall Genie initially featured the “shopping assistant” function, which could query express deliveries and place voice orders. However, with the convenience of mobile shopping, this advantage has disappeared. Alibaba once tried to transform it into a content terminal by introducing music and video resources, but faced competition from professional platforms such as Himalaya and Tencent Video, and user stickiness was insufficient.
Finally, Huawei has never been able to replicate its strong performance in the mobile phone market in the smart speaker field. Although it is also among the top four on the list, in fact, the top three have occupied over 97% of the market share, and Huawei only accounts for less than 2% of it. Different from the top three manufacturers, Huawei focuses more on the high - end market. This strategy ensures product profits but also limits the market scale. At present, the smart speaker market is still constantly changing with the arrival of AI. Focusing on the high - end too early may cause it to miss the opportunity in the popularization stage.
Summary:
The golden age of smart speakers has passed. It was once regarded as the entrance to smart homes, but now it is gradually being marginalized by the squeeze of mobile phones, tablets, and smart screens.
The sales data of four consecutive years of decline prove that simply relying on hardware popularization and function stacking is no longer sustainable. Although AI provides a certain growth impetus, judging from the market feedback, manufacturers haven't grasped the precise pain points of users' needs.
Should they continue to pursue becoming the hub of smart homes, return to the essence of audio devices, or look for new scenario values?
Finally, it should be said that what users really want is not showy features. If even “making a sound” becomes complicated, then the fate of smart speakers may really be like that of pagers, becoming a footnote of a certain era.
This article is from the WeChat official account “GPLP Rhino Finance”. Author: Hasove. Republished by 36Kr with permission.