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Alibaba (BABA) Unveils Smart Home Assistant Tmall Genie X1

Rumors regarding the launch of Alibaba Group Holding Limited’s BABA Amazon-like voice controlled speaker have been doing the rounds for the past few days, leading to speculations regarding the specifications of the gadget.

At a press conference in Beijing on Jul 5, the Chinese tech giant took the wraps off Tmall Genie X1, its new smart home assistant. The official rollout is slated for Aug 8. For now, the device takes orders only in Chinese, which means that it won’t be hitting the U.S. market.

Specifications and Functions

Powered by Alibaba’s home grown voice assistant service AliGenie, the 12.6 cm tall device is capable of performing a range of tasks, ranging from scheduling and reminding, media streaming, fact finding to controlling other smart home devices. It allows domestic customers to order from the company’s Tmall website and make payments through Alipay, the company’s third-party payment system.

The device is a lookalike of Amazon’s AMZN Echo but is about half its size. It can be activated by saying “Tianmao Jingling” just as Amazon’s Echo gets activated on saying “Alexa”. It is fitted with a custom Smart Audio chip and supports a 6-beam microphone array on the top and a subwoofer at the bottom.

Low Price to Counter Competition

With the launch, Alibaba enters a highly competitive market in China marked by the presence of Baidu BIDU, JD.com JD and Tencent. It has kept the price of the new device considerably lower than that of its domestic rivals as well as western counterparts to gain a competitive advantage. That makes sense especially when Alibaba has made a quiet and late entry into the space.

Tmall Genie X1 will be on sale for $73 (499 yuan), significantly less than Baidu’s Xiaoyu that sells for $250 (1,699 yuan) and JD’s DingDong that sells for $118 (799 yuan). As far as its western counterparts are concerned, prices of Amazon Echo and Apple’s HomePod are a respective $180 and $349.

Going Beyond Core Retail

Increased competition and market saturation have forced Alibaba to move beyond hawking goods online. The company is trying to build its business as an ecosystem of retail, cloud and artificial intelligence. With its newest venture, it appears that Alibaba is banking on artificial intelligence and machine learning for much of its future growth.

Alibaba Group Holding Limited Net Income (TTM)

Investors will surely keep an eye on how Alibaba’s efforts beyond online retail impact its share price, especially when it has appreciated a massive 82.6% over the last one year compared with the Zacks Electronic Commerce industry’s gain of 49.4%.

The “Follow Amazon” Strategy

From its grocery push and blending online and offline features in retail to movies, cloud and artificial intelligence, Alibaba has been doing exactly what Amazon does in the U.S. Other Chinese technology giants are also mimicking the ways of U.S. technology leaders.

This is a clever way of utilizing the Chinese regulatory environment and further strengthening entry barriers for U.S. competitors.  By having a business similar to those of their U.S. rivals, Chinese companies will enjoy the home advantage even if regulations ease in the future.

Going Forward

Apart from enabling customers pay through the device using Alipay, the company is opening up the software powering Tmall Genie X1 to third-party developers. That makes sense because third party contracts could help it penetrate potential business areas going forward, apart from attracting more customers to its websites.

The once nascent smart home market is already a potential area of growth, thanks to Amazon and Google. Now, it remains to be seen how Alibaba could further disrupt the industry.

Currently, Alibaba is a Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

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