But Baidu’s recent change in strategy may be a signal that the battle for market share at any cost is cooling, and companies are starting to look to increase revenue instead.

Will smart speakers ever make real money in China?

“At the start we needed huge discounts for users to accept smart speakers,” Jing said last week at a media briefing. “Often, price is a barrier for consumers when they do not understand the value of a product. But when you understand its value, the price is no longer a barrier.”

Jing added that it was “impossible” for the company to keep subsidising products, and cutting down on the subsidies was also healthier for the industry.

With the industry more mature, Jing said Baidu is shifting its focus for subsidies to its content, such as offering Xiaodu smart speaker buyers free membership for its video streaming service iQIYI, rather than subsidising the smart speakers themselves.

As of the latest quarter, Baidu ranks third worldwide in terms of smart speaker shipments, behind only Amazon and Alibaba in first and second place respectively.

With regard to low-priced devices, Canalys senior analyst Jason Low said in the November report: “It is crucial, especially for Chinese vendors, to avoid falling victim to the sunk-cost fallacy ... They have to stop money-burning to achieve shipment goals, but instead focus on their overall business objectives and to generate revenue soon.”