Why Google & Amazon sold their speakers for a loss
Amazon & Google smart speakers have flooded the market; Apple's late to the party
Holiday sales this year did wonders to virtual assistant speaker’s sales’ numbers. Both, Amazon & Google, sold their cupcake-sized speakers (Amazon Echo Dot & Google Home Mini) like hotcakes. But to get customers accustomed to this new amalgamation of technology and convenience, they had to deeply discount them for the holiday season this year. Both these mini speakers which usually sell for $50 were brought down to $29.
Apple’s HomePod speaker was announced back in June of last year and failed to ship during the holiday season. With the $349 speaker that is expected to go on sale any day now , Apple aims to earn mostly out of its retail tag and the expected increase in the Apple Music subscription of $9.99 per month.
On the other hand, Amazon and Google seem to be to more keen on getting consumers to adopt these smart speakers for which they had to lower the tag price. According to an analysis by ABI Research, the Echo Dot has about $31 worth of parts while the Google Home Mini costs around $26 to make. But these above figures don’t account for overheads, shipping and distribution expenses which most likely means that both these companies sold their mini speakers for a loss during the holiday sale. But what they lose in their retail revenues, they will most likely cover up in future with the sale of goods and data about buying habits.
According to a senior research analyst at IDC, more than 35 million smart speakers had been installed worldwide excluding US Christmas Sales.
For most consumers the leap from a $30 Google Home Mini & the $80 Google Home (prices during the Holiday Sale) to a $349 Apple HomePod may not be worth it. Without a doubt these cheaper speakers won’t match the sound quality of the HomePod but would the higher price tag of the HomePod it be sufficient enough to justify this gap in price? Some analysts think not. The blistering sales of Amazon’s smart speakers and now Google’s may be a reason to worry for Apple. According to a senior research analyst at IDC, more than 35 million smart speakers had been installed worldwide excluding US Christmas Sales. This explosion in the last 6 months might prove costly to Apple’s latecoming to the party.