Google Home didn’t wait until Black Friday or Cyber Monday to go on sale. It started selling the device at $99, a 23% discount on November 23rd. Think of it as Black Friday week. Of course, this may have undermined Google Home retail partner Best Buy’s attempt at the same sale price for Black Friday hoping to drive some foot traffic. Oops.
Amazon is taking the more conventional cyber Monday promotion offering the Echo Dot at a 25% discount at only $39.99. The online retailer is also offering the original Amazon Echo tower for $139.99, a 22% discount off of list.
What does this tell us? Price matters. The makers of voice assistant devices such as Amazon and Google are more interested in building a large user base than maintaining margin on their hardware sales. Both recognize that the user base for voice assistants is more valuable than the hardware. Apple should take note. Of course, Amazon doesn’t operate on large margins anyway so discounting is a normal strategy for the company. And, reports earlier this year suggested Echo users were placing more Prime orders which means there are more ways for Amazon to earn revenue from Alexa than just selling devices. Similarly, you can imagine that Google is keen to maintain its search dominance and the advertising benefits that come from it. Voice assistant based search is just the next battleground.
Low Priced Access to Powerful Technology
It is a great development for consumers that a device as useful as Amazon Alexa is now only $40. In an earlier opinion piece we lauded the $50 price point and pegged that as meeting the threshold of one of the four critical factors in rapid technology adoption. The low price points and frequent discounting will make it hard in the near term for startups that also want to produce hardware-based voice assistants to compete. They won’t be able to subsidize the hardware costs based on complementary revenue streams. However, the price competition is no doubt making for happy shoppers this holiday season.