Amazon.com Inc. (NASDAQ: AMZN) had its biggest holiday season ever this year and its best-selling products were the Echo Dot voice-controlled speaker and the Fire TV Stick that sold for $29.99 and $39.99, respectively.
Apple Inc. (NASDAQ: AAPL) delayed the launch of its $349 HomePod voice-controlled speaker until sometime in January. Even if it had been available, chances are the HomePod would have been far behind the Echo Dot in sales due mainly to device pricing.
And Amazon is not letting up on the pressure. The e-commerce leviathan continues to sell the Echo Dot for $29.99, a discount of 40% from the list price of $49.99, even as the 2017 holiday season recedes further in the rear-view mirror.
Smart speakers like Amazon’s Echo and Echo Dot, Apple’s HomePod, and Alphabet Inc.’s (NASDAQ: GOOGL) Google Home have reached a “critical adoption threshold” according to comScore. Analysts at eMarketer project the number of U.S. smart speaker users to reach 35.6 million in 2017 (13% of internet users) and 52.8 million in 2019 (18.8% of internet users).
A few days before Christmas, eMarketer analyst Cindy Liu compared consumer interest in smart speakers to their interest in wearables like Apple Watch:
Consumers have yet to find a reason to justify the cost of a smartwatch, which can sometimes cost as much as a smartphone. Instead, for this holiday season, we expect smart speakers to be the gift of choice for many tech enthusiasts, because of their lower price points.
Given Amazon’s consistent strategy of striving for share over profit, it’s easy to see why the company is keeping the price of its Echo Dot low. Smart speakers are positioned as gateway devices for smart homes where a variety of smart appliances and other smart devices like thermostats and lights can be voice-controlled through the smart speaker.
Amazon is the unquestioned leader in voice-controlled devices and plans to build on that leadership position to keep Apple an also-ran. Google Home, which sells for $79 at Walmart with a promotional discount of $25 if a customer buys one with Google Express, can put even more pressure on Apple.
It looks like Apple didn’t catch the smart speaker wave at the right time and that the company is going to be swamped as a result.