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Google and Amazon said to have lost money on smart speakers during the holidays

But it may be just the price to pay for an early lead in the fledgeling connected speaker market.

Published onJanuary 4, 2018

  • Amazon and Google are both believed to have sold their low-end connected speakers at a loss during the Christmas period
  • The Echo Dot was Amazon’s best-selling product in that time, selling “millions”
  • Apple believed to have a mountain to climb when entering the home speaker market now

Amazon and Google both held sales on their connected speaker products during the holidays to give consumers an even bigger reason to buy them. According to a recent report from Reuters, some of these were discounted so heavily that they were even sold at a loss.

The Amazon Echo Dot and Google Home Mini were brought down to as little as $29 to pick up early adopters, with Amazon’s Echo parts costing an estimated $31, and the Google Home Mini’s around $26. Those numbers don’t include “overhead, shipping and other expenses,” noted Reuters, meaning both companies were likely to have lost money on them. The other smart speakers in their catalogues, meanwhile, were also aggressively priced during the holiday season.

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Making short-term hardware losses isn’t anything new for tech manufacturers, particularly when that hardware can drive revenue through other means. Amazon’s Echo Dot can be used to help owners buy Amazon products using just their voice, while Google can leverage voice search data through its Home Mini’s to help improve its other services.

More than that, we’re at a crucial early adoption period for home speakers, where people are choosing sides. Once a person has become accustomed to one brand/platform/interface, it can be difficult to make them change to another later — something Amazon and Google will, naturally, be keenly aware of.

Google Home vs Amazon Alexa

Amazon said it sold “millions” of Echo Dot speakers over the holiday period and it was the best-selling product (by any manufacturer in any category) on Amazon during that time. According to Reuters, Nicol Addison, a spokesperson for Google Home, said that Google was very happy with Google Home sales over the period; however, we don’t know how many it achieved.

Though the Amazon Echo has been on sale in the US since summer 2015, Apple still hasn’t launched its competing home speaker, the Apple HomePod. This is said to be coming Q1, 2018 for $349, but this could be a rare mistake from Apple; it is perhaps too late to the market, with too expensive a product (and one that focuses on the wrong area: sound quality) to compete in any meaningful way.

But then, Apple wasn’t first in the smartphone game either — and we all know how that turned out for the Cupertino company.