Analysts opine that consumers would largely prefer mid ranged priced smart speakers over one that costs hundreds of dollars.
According to analysts, both Amazon.com and Alphabet Inc have heavily discounted their virtual assistant speakers during the U.S. holiday shopping season such that they have lost many dollars per speaker sold.
The development underscores a sharp difference in pricing strategy the duo have adopted over Apple, as it prepares to launch its HomePod speaker.
Apple which had said earlier that its $349 HomePod speaker would go on sale in 2017, has said it will now be available for sale in early 2018.
Analysts say Apple aims to make a profit on the device as well make another pile in its $9.99 per month Apple Music subscription with Siri, Apple’s voice assistant likely to recommend new songs for its device.
Google and Amazon have been eager to provide customers a taste for their respective digital assistants in the hope that customers lock in to their platform.
Both companies will profit from data on customer’s buying habits.
According to analysts, although Amazon’s Echo Dot and Google’s Home Mini do not match the HomePod’s sound quality, consumers however are likely to opt out of the significantly pricier HomePod and stick to Google’s and Amazon.
The writing on the wall appears to be clear from the discount strategy the duo have adopted, with Google and Amazon providing even their mid-level devices to just $79.
“That kind of pricing is great for consumers and bad for Apple,” said Paul Erickson, a senior analyst with IHS Markit.
This assumes significance since consumers are likely to prefer a $30 speakers rather than spend hundreds of dollars for Apple’s device when it arrives.
Currently Amazon dominates the emerging market for smart speakers outside of China, with Google close behind it. Sales of these devices have not assumed substantial proportional so as to affect their respective financial results.
According to analysts, both companies took small losses or broke even on sales.
“Apple is in a bit of trouble,” said Adam Wright, senior research analyst at IDC, who estimated that about 35 million smart speakers had been installed worldwide as of a couple of weeks ago – not including U.S. Christmas sales. “We’ve witnessed an explosion in the last six months.”