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 the majority of what people were using Alexa for, and fulfilling those requests made little to no money for Amazon. During the first quarter of 2022, Amazon’s Worldwide Digital unit, which included Alexa, Echo devices and Prime Video, reportedly had an operating loss of $3 billion, with the “vast majority” tied to the digital assistant. Things might have changed for Amazon since then, but other than announcing that 1 million people were using Alexa+ as of June 2025, the company hasn’t shared many notable milestones since then.
“I don’t know if anyone makes money on the hardware or not,” says Ubrani of the other major players in the market. “[Companies] primarily use these devices as a vehicle to their ecosystem.”
Despite those concerns, Ubrani says there is at least one way OpenAI’s plan makes sense. “The industry as a whole agrees AI is the way forward, but AI can’t just be locked in a browser. It has to understand the world around you to be truly helpful, and the only way a company like OpenAI can do that is if they have hardware,” he says. “It has to start somewhere, and this is a way to start. It’s also a way to enter the hardware market with the least amount of resistance.” He points out building a smartphone or a pair of smart glasses would be more expensive due to the more complicated supply chains involved in both categories, as well as the cost of carrier certification for mobile devices.
Still, Ubrani agrees making hardware is difficult, and there are recent examples of companies failing in the exact market OpenAI is attempting to enter. Most famously, Meta ended development of its Portal smart displays in 2022 in a move that saw it lay off 11,000 people at the same time. And it’s worth repeating, OpenAI is not profitable. Leaked financial documents show the company lost $5.09 billion in 2024 and $38.5 billion in 2025, and OpenAI itself has said it doesn’t expect to be profitable until at least 2030 due to surging AI costs. A smart speaker won’t be what helps it turn the corner.