Alibaba Discounted its Top Smart Speaker to $15; Sold 1 Million

I purchased a Tmall Genie X1 — Alibaba’s flagship smart speaker — at the discounted price of US$15 during China’s November 11 “Singles Day” shopping festival. I was given order number 560,000-ish, and received the product a month later. The speaker is regularly priced at US$79, about the same as its American counterpart Google Mini.

A Chinese smart speaker industry insider who declined to be named told Synced that it would be impossible to even cover hardware costs for $15, but smaller brands had no choice but to go into a price war with Alibaba, cutting their own Singles Day prices to as low as $10. There were strong smart speaker sales across the board, but the big winner was Genie X1, spurred by an incredible online marketing campaign and supported by superior sales channels.

The Smart Speaker story begins back in 2011, when Amazon began working on its voice assistant Alexa. Amazon’s Echo smart speaker, powered by Alexa, went on sale in 2014, and although sales were initially sluggish, other tech companies picked up on smart speakers very quickly.

Sensing the trend, in April 2015 Alibaba devoted hundreds of engineers to smart speaker software prototypes, teaming up with hardware partners LED manufacturer Lipu Lighting and speaker manufacturer Edifier; and launching its smart voice assistants XiaoFei and MA1/3/5 within the span of three months.

Both were however poorly received in the market. Team leader Xue Qian says she realized in retrospect that although Alibaba’s first attempts had sound outsourced hardware, the Android-based software system wasn’t the right solution.

In 2016 Alibaba formed its AI Lab and put Qian in charge. The lab was backed by iDST and ET City Brain and attracted talents such as former Nanyang Technological University Professor Gang Wang; Principal Researcher and Head of the Big Data Mining Group at Microsoft Research Zaiqing Nie, and Project Tango Lead of Google Mingyang Li.

The lab invested much time and energy in streamlining Smart Speaker hardware and software design, eventually giving birth to AliGenie, the first generation Human-Computer Interaction (HCI) system that runs on the cloud and understands user commands in Mandarin.

AliGenie is the brains behind the Tmall Genie X1, which was launched in July 2017.

Tmall Genie X1 employs 5-meter far-field voice recognition technology supported by cutting edge acoustic beamforming technology with six microphones, which enhances user voice and cancels background noise. It uses natural language processing, knowledge graphs, machine learning, and AR to perform functions such as smart home control, voice shopping, mobile phone recharge, takeout orders, and music play. The voice recognition neural network model is trained with massive labeled voice and language data that covers most daily dialogues.

AI Lab’s team monitors and collects all online reviews. “Even bad reviews are good to us because they are user feedback. It’s rare that our competitors get so much feedback, and smaller brands are definitely envious,” explains Qian.

Criticism of Genie X1 includes poor interactive experience and performance with online shopping tasks, limited connectivity as a smart home controller, and performing worse than conventional remote controls.

Smart speakers are being developed as the home’s future portal for connected devices, but ironically competitors are blocking each other’s access in this space with proprietary technology. For example, customers who purchase a Genie X1 will not be able to use Xiaomi’s smart lightbulbs, and will have to buy a designated Midea air conditioner if they want to control it via the Genie X1.

Filling more than one million orders tested Qian’s nerves as her team struggled to meet demand, “we out-purchased all available amplifiers and chips on the market, with factories running 24/7, and still lagged on delivery date. The capacity to manufacture smart speakers at large quantities is an overlooked problem.”

In the burgeoning smart speaker market fast iterations are essential to survival. “We are three years behind Amazon’s Echo,” says Qian, “but it took us just four months from launching Tmall Genie X1 to reach one million unit sales.”