How Amazon and Alphabet Are Ganging Up on Apple

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Amazon.com Inc. (NASDAQ: AMZN) and Alphabet Inc. (NASDAQ: GOOGL) each sailed to a new high during the holiday season on the back of strong sales. In this time, these industry giants had one major thing in common and that was the pricing of their digital assistant speakers. And this could spell trouble for the likes of Apple Inc. (NASDAQ: AAPL) in the time to come.

Both Amazon and Alphabet priced the respective smallest version of their speakers, Amazon Echo Dot and Google Home Mini, as little as $29 down from $50 during the U.S. holiday season. As a result the New York Post reported that both companies took small losses or broke even on sales for these devices, according to analysts.

ABI Research believes that Amazon’s Echo Dot is worth about $31 as a sum of its parts, while the Google Home Mini costs around $26. Note that these figures do not account for overhead and other similar expenses.

So where does Apple come into this?

Apple was initially expecting to ship its $349 HomePod speaker this holiday season but the plan fell through, and now the iPhone giant is expecting to start shipping these devices in early 2018. There are two problems right off the bat. First, Apple’s price for its speaker is significantly higher than what either of its competitors is pushing. Second, Apple is late to market for this device.

While the Echo Dot and Home Mini do not measure up in terms of sound quality, they seem to be great picks at “impulse buy” prices. Also at this point consumers may see less of an appeal going for a superior, pricier speaker in Apple once they have a rival setup already in place.

Shares of Amazon were last seen trading at $1,206.65, with a consensus analyst price target of 1,280.16 and a 52-week range of $760.26 to $1,215.85.

Alphabet shares were trading at $1,087.82. The stock has a 52-week range of $785.02 to $1,093.57 and a consensus price target of $1,100.86.

Apple traded at $172.88 a share, with a 52-week range of $115.81 to $177.20 and a consensus price target of $187.58.