Amazon and Google are fierce enemies in a new business: Smart speakers. Amazon’s Echo has a clear lead on Google Home, and Apple’s HomePod delay is helping both companies sell even more smart speakers.
But the two companies aren’t looking to make any real profits right now. Instead, they’re fighting for market share, hoping that they’ll be able to retain customers and then sell them other products or turn a profit on search data.
According to Reuters, both Amazon and Google cut prices for their most affordable speakers in the period leading up to Christmas, even though it meant taking a loss on each sale.
The Amazon Echo Dot and the Google Home Mini sold for as low as $29 during the holiday season, a significant price drop from their regular sticker price of around $50. Even mid-range devices like the regular Echo and the Google Home were priced at $79 before, during, and after Black Friday.
The Echo Dot costs $31 to make, while the Home Mini’s parts are priced at around $26. These costs do not include overhead, shipping, and other expenses, meaning that Amazon and Google are taking losses on each unit sold. “That kind of pricing is great for consumers and bad for Apple,” says IHS Markit senior analyst Paul Erickson.
Apple had to postpone the launch of its $349 HomePod speaker, which is now expected to drop in early 2018.
IDC has a similar sentiment about Apple. The research company says some 35 million smart speakers were installed around the world as of a couple of weeks ago, not including Christmas sales. “We’ve witnessed an explosion in the last six months,” IDC’s Adam Wright said, adding that Apple is “in a bit of trouble.”
Apple, however, never fights for market share at the expense of profits when it comes to any of the devices it manufactures. It probably won’t do that with the HomePod either, no matter how big of a hill it has to climb.