Eyebrows are almost always raised when giants of internet and software make hardware investments. An exception to the rule happened towards the end of last week, with Baidu investing $158 million into Chinese electronics maker Skyworth Digital’s smart TV sector. What makes this stand out is the investment supposedly has a core focus on artificial intelligence rather than the TV, set top and WiFi gateway businesses Skyworth is better known for.
By AI, Baidu really means voice-powered intelligence embedded into smart TVs via its own DuerOS, as China’s largest online search engine once more strengthens its position to get a foothold in a voice market which some have suggested is more competitive than the US and Europe combined.
DuerOS is Baidu’s conversational AI system geared towards creating a full AI platform, powered by the Qualcomm Snapdragon 845 system-on-chip (SoC), which has appeared in smartphones, set tops, smart speakers and IoT use cases including autonomous cars and refrigerators. Therefore, the smart TV sector seems to be an entirely new field for DuerOS, while Baidu’s streaming arm iQiyi acquired a 4.6% stake in the same smart TV unit in 2016, so clearly Baidu has been keeping a close eye on Skyworth Digital for a number of years.
The idea for the television of the future is for DeurOS to not only serve as a smart assistant responding to voice commands for content, but to know what users want before a verbal command is made, according to Baidu CEO and co-founder Robin Li Yanhong. Presumably this will work in a similar manner to Google, deriving an abundance of user data from its various dealings across search, mobile, video streaming and more – meaning Baidu already has a wealth of data to crunch for providing highly personalized services as DuerOS slides into smart TVs.
Monetizing DuerOS is another matter and indeed a dilemma for AI companies around the world in various verticals. Whether Skyworth Digital will embed the AI platform into all its smart TV products and strike a revenue share deal with Baidu, or if DuerOS will only be accessible to paying subscribers of Baidu’s streaming service iQiyi (some 60 million of them) on Skyworth’s smart TV sets, are two of many possible options for the future, details of which have not been outlined.
Baidu has faced an uphill battle against rivals Alibaba and Tencent in the smartphone sector, hence the company’s increased focus on developing voice-powered use cases away from the handset.
As well as an aggressive government-driven AI development scheme in China, Baidu also recruited a helping hand from US semiconductor firm Conexant last July, now owned by touch and biometrics specialist Synaptics. Conexant has proven successful on the back of mixed signal chips offering far field voice control, dealing with noise and echoes when a voice needs to be understood in a noisy environment, and locating where that voice is coming from so the device can listen more intently in that direction.
Baidu launched its debut smart speaker in November called Raven H, a high end $256 device developed through the acquisition of Chinese start-up Raven Tech. No shipment figures for Raven H are available, although local Chinese news outlets have highlighted how Amazon, Apple and Google have little presence in the region due to struggling with mastering Chinese languages, particularly Cantonese, as well as facing competition from more than 100 native smart speaker developers.
In exchange for an 11% stake in Skyworth Digital’s Shenzen Coocaa Network Technology, Baidu subsidiary Dagze Bairuxiang Venture Investment Management has agreed a deal that will see it join Tencent Holdings as a shareholder, which bought a 7.7% stake in the smart TV firm last year for $47.4 million.
Separately, iQiyi this week launched its IPO in New York valued at $2.4 billion, with the aim of using half the funds to strengthen its content offering and some 10% of proceeds put towards technology R&D.