Investment bank Morgan Stanley recently did something very peculiar:
It told Google to give away one of its “smart speakers” to everyone in America — for free.
The cost of this giveaway? About $3 billion.
For the last hundred years, CEOs from top companies have relied on Morgan Stanley not just for access to capital, but for sound strategic advice.
So why in the world would it tell Google to give away billions of dollars?
Speaking Is Easier than Typing
Before I explain, let me back up for a minute…
Let me tell you what smart speakers are. Then I’ll reveal why Morgan Stanley would recommend that Google give away $3 billion of them.
A smart speaker is a device that can “listen” to you and interpret your voice commands.
For example, instead of typing out a grocery list, teeing up a song on Spotify, or fumbling for a light switch, you could tell your smart speaker to do the following — and it will take care of your requests instantly:
“Buy some laundry detergent, toothpaste, and a box of Triscuits.”
“Play the Rolling Stones.”
“Turn on the kitchen lights.”
The Competition Heats Up
According to research company Canalys, smart speakers have become the fastest-growing consumer technology in recent history.
By 2022, it’s estimated that 70% of U.S. households will own one.
Amazon Echo and Google Home are the two leading products in this space. But Google is currently getting its butt kicked by Amazon.
That’s why Morgan Stanley is recommending that Google give away its devices for free…
You see, whoever “wins” this battle will earn the lion’s share of the advertising and e-commerce revenue these devices generate…
And that could add up to hundreds of billions of dollars.
With Covid-19, Now We Don’t Want to Touch Anything
But here’s the thing…
Now that we’ve gotten used to “telling” our devices what to do, we want to control all our electronics this way — TV sets, kitchen appliances, you name it.
Furthermore, because of Covid-19, now we don’t want to touch anything…
So consumer interest in voice-activated devices is skyrocketing.
Perhaps this helps explain why a certain startup has been growing so quickly…
SapientX is a software company focusing on the market for voice assistants.
In other words, it doesn’t make its own smart speakers…
Instead, it uses its proprietary natural language understanding (NLU) software to add voice assistants to existing devices.
For example, it’s working on a voice assistant for transportation companies including Mitsubishi, Volvo, and Indian Motorcycles. And when this tech is released, you’ll be able to tell your car to do things like turn up the air conditioning, move your seat forward, check traffic, or change the radio station.
SapientX is also working with companies like Samsung and GE, so you can use your voice to control your TV, your home appliances, and maybe even your elevator ride.
The Market for Voice Solutions
According to research companies Statista and Arizton, the market for voice solutions will be worth $32 billion by 2025.
Google and Amazon’s products aren’t relevant for most of this market. Those companies just want you to use their device so you’ll buy things.
But SapientX could potentially become a major player here:
- Its accuracy for “conversational understanding” has been measured at 99%. According to ZDnet, Siri’s accuracy is just 75%, and Alexa’s is 73%.
- It can run without the Internet. This means it can keep user data safe.
- And its software can speak 40 languages and dialects.
SapientX has already attracted customers like Mitsubishi and Samsung, and is in discussions with more than 100 others.
Furthermore, Covid-19 has presented it with opportunities to bring its technology to new places — from Zoom conference calls, to robots, to vending machines.
The company has already attracted about $6.5 million in funding. But now, to grow more quickly, it’s raising capital from investors like you.
Earlier this year, it did a $535,000 funding round that got filled up. But now it’s re-opening the round and raising up to $1.07 million, with a minimum investment of $100.
Should you invest? Let’s take a look at some of the pros and cons.
The Pros and Cons of an Investment
On the “pro” side:
- This is a huge, fast-growing market.
- It’s a hot sector for M&A: 16 voice-tech startups were recently acquired.
- The team includes rocket scientists from NASA and Blue Origin, and engineers who’ve won the prestigious Loebner Prize for conversational AI.
But on the “con” side…
With a market this big, competitors will surely emerge.
That’s why I’m not recommending that you run out and blindly invest in SapientX…
This is a risky venture, and it requires substantial investment research to understand how things might play out.
But if you believe people want to control their devices with their voice, it’s worth a look!
Please note: Crowdability has no relationship with any of the startups we write about. We’re an independent provider of education and research on startups and alternative investments.