Smart Speakers Could Help OpenAI Lose Even More Money

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Smart speakers could help OpenAI lose even more money

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Smart speakers could help OpenAI lose even more money

This feels like the epitome of a distracting side quest.

By Igor Bonifacic

July 16, 2026 10:40 am EST

Primakov/Shutterstock

This past spring, former OpenAI executive Fidji Simo warned employees the company was at risk of missing its moment because it was "distracted by side quests," referring to costly software projects like Sora, which OpenAI shut down in April. This week, Bloomberg's Mark Gurman shared an update on the company's nascent hardware efforts, writing that OpenAI's debut first-party device would be a "humanlike" rechargeable smart speaker. For an unprofitable company, this feels like the epitome of what Simo hoped to avoid.

In 2026, the market for smart speakers and displays isn't growing. "In terms of the trend line, it's been slowing for quite some time, and we're expecting declines in the upcoming year," says Jitesh Ubrani, the director of worldwide device trackers at market research firm IDC. He declined to share specific numbers related to the size of the smart speaker market, but did say shipment volume in recent years has dwindled to "tens of millions units" following 2022 when the tech giants, led by Amazon, shipped more than 100 million devices.

According to the firm's data, shipments declined by 16.3 percent year-over-year in 2023. The year after, they went down by another 11.8 percent. The introduction of Alexa+ in 2025 appears to have lessened the bleeding somewhat, but the market still contracted by 6.7 percent that year. By the end of this year, IDC estimates it will shrink another 9.6 percent before flatlining next year.

In the US, Ubrani attributes the state of things to the fact most people aren't upgrading their smart speakers. "[If you're a consumer], there's really no need to refresh your device because the latest features are cloud-based, and so you can continue on with the same hardware," he says. "From a use case perspective, there's not a whole lot people are doing with these devices. They use them for music, podcasts, timers, those sorts of things. It's very simple compute."

For OpenAI, Ubrani believes making a dent in the market will be difficult. "Creating the device is not hard, but getting it to reach any sort of mass scale, that's a lot more difficult to do because there are established players out there, and the category itself has not evolved a whole lot," he says.

One major issue could be the price of the device itself. Bloomberg describes a smart speaker with a camera and sensors to help it understand its surroundings, as well as a rechargeable battery and "mechanical elements that can move on their own." That sounds a lot more complicated (and expensive) than say the humble Echo Dot.

"Smart speakers for many years were a very low-cost device. We're talking about under $100, and those were the devices that sold the best," says Ubrani. "We've seen pricing move up, but no one views this as a premium category. Many people would balk at the idea of spending $300 for a speaker, and whoever enters the category has to have more affordable options available."

According to Bloomberg, OpenAI "believes the product's defining feature will be its personality and ability to connect on a humanlike level with users." The device will leverage the company's new GPT-Live-1 voice model, which is built on a duplex architecture, giving it the ability to simultaneously process inputs while generating an output. "This allows the model to engage in a more natural back-and-forth, maintain a better sense of time, and even perform live translations," OpenAI said of the tech recently.

Amazon made a similar set of claims when it announced Alexa+ last year. Thanks to generative AI, the company said the new digital assistant could detect the user's tone and mood and adapt accordingly. It also offers contextual awareness, giving it the ability to "remember" earlier parts of a conversation. Despite those enhancements, Alexa+ doesn't appear to have moved the needle for Amazon. "Even after the introduction of the smarter AIs like Alexa+ and Gemini, we haven't seen a big change in the trajectory of the market," says Ubrani.

It's also unclear if OpenAI can even make money off a smart speaker. Again, let's look at Amazon, the dominant player in the space. As of 2022, the company had failed to find a way to generate ongoing revenue from Alexa, according to a report Business Insider published that year. At the time, the company's Echo family of smart speakers were among the best-selling products on its marketplace, but Amazon sold most of those devices at cost and had failed to find a way to monetize interactions with Alexa.

Per Business Insider, a major problem was that simple requests, like a command to play a music track or a question about the weather, represented...