Would it come as a surprise that neither Amazon or Google made money on smart speakers during the holiday period after embarking upon a market share contest?
Affordable smart speakers saw a boom over the gift giving season, with Amazon Echo and Google Home featuring at the forefront of the ‘most sought’ list. Revealing that it sold millions of Echo units, reports have uncovered that Amazon may not have actually made any profit from the sales. In fact, it may have ended up losing money — with Google reportedly in the same boat.
The report suggested that Amazon and Google had embarked on a market share contest over the festive season, heavily discounting their smart speakers (in particular their smallest speakers) to the extreme that each sale may have actually resulted in a loss of a few dollars per unit.
During the holiday period both Amazon Echo and the Google Home Mini were discounted to the price of $29. Apple’s Siri-powered HomePod smart speaker was also supposed to be released during this period but the company delayed the release to 2018.
Apple’s $349 speaker is expected to enter the smart speaker market and go on sale in the next few weeks. The company reportedly aims to make a profit on this device and would likely not have indulged in the market share contest with Amazon and Google over the holiday period.
Though discounted prices would have helped both companies to give customers a taste of their digital assistants and make a dent in the smart speaker market; the more pressing question in the months to come will be if selling speakers at impulse-buy prices would have brought in new customers. This will likely be put to the test now that the companies will try drive the cost of devices back to the intended selling price, thus ensuring a profit from the sales of the goods.