Google and Amazon lost money on smart speakers during the holidays, say analysts


Amazon and Google heavily discounted their respective smart speakers over the busy holiday shopping season, resulting in devices being sold at a loss, according to a report stemming from analysts that spoke to Reuters.

The Home Mini and standard Home were discounted to $39 CAD and $99 respectively, and Amazon offered its Echo Dot, 2nd Gen Echo and Echo Pro at discounted introduction rates (usually about $30 off). Analysts believe the devices were sold at a loss, given that their cost likely didn’t include overhead, marketing and other expenses.

It’s worth noting that short-term hardware losses aren’t new for the tech industry, especially when hardware sales have the potential to drive other revenue streams — this is often how the video game industry operates when consoles launch with expensive price tags. For example, Amazon’s low-cost Echo Dot can be used to purchase Amazon products with voice commands, while Google likely leverages the voice search data it gathers from Home devices to improve its various other search services.

This is also an era of early adoption for smart speakers, where both Amazon and Google need to encourage users to take the standalone, voice-activated speaker plunge. The lower the price tag, the more likely consumers are willing to take a chance on the burgeoning technology. Then there’s also the fact that Apple’s HomePod is still looming on the horizon, though the tech giant’s smart speaker offering has reportedly been delayed.

To its credit, Amazon says that it has sold millions of Echo Dot speakers over the holiday shopping season, stating that it was the best-selling product from any manufacturer, in any category, on its online retail platform last month. In a statement to Reuters, a spokesperson for Google said that the Mountain View, California-based company was very happy with Home’s sales over the holiday season.

In other smart speaker news, it looks like Amazon could be considering bringing advertisements to Alexa, though the company has denied the reports.

Source: Reuters