Report: Google and Amazon Likely Lost Money on Smart Speaker Sales Over the Holidays

Report: Google and Amazon Likely Lost Money on Smart Speaker Sales Over the Holidays

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There seems to be an ebb and flow when it comes to consumer tech, and nowhere is it more apparent than the smart speaker market, where Amazon and Google are competing for dominance. The competition’s fierce enough that neither’s afraid to forgo profits — according to a Reuters report, in fact, Google ended up losing money on the Google Home Mini and Amazon the Amazon Echo Dot over the holidays.

Both Amazon and Google took advantage of the holiday season to bolster sales. The Amazon Echo Dot and Google Home Mini were discounted to as little as $29 (from $50 and $35, respectively), which put them in “impulse buy” territory. But neither turned a profit — analysts estimate that the companies broke even or took small losses on sales.

Analysts at ABI Research estimate that the Amazon Echo Dot’s bill of materials is about $31, and that the Google Home Mini’s parts total $26. But that doesn’t take into account advertising, manual labor, shipping, and research and design costs. Amazon and Google try to recoup revenue through other means, like commissions on sales items and customer data-sharing arrangements. But those aren’t guaranteed.

Amazon has a head start in the smart speaker market, and that can tough to beat — the retail behemoth currently leads the pack, and is making headway in emerging markets such as China.  But Google’s nabbed the second-place spot, and it’s been doing a lot of work to help close the gap.

In any case, it shows how committed both companies are to the smart speaker market and the lengths they’re willing to go in order to grow their customer base.

Source: Reuters