Will Amazon Echo Sales Top 7 Million Through 2016?
Consumer Intelligence Research Partners (CIRP) put out a revised note on Amazon Echo unit sales in November suggesting that 5.1 million had been sold through Q3 2016. What does that mean for the total sales through the full year of 2016? Amazon is not likely to release unit sales anytime soon, so we are left with third party estimates of total market size to build our forecast. Voicebot estimates that total sales through 2016 will near 7 million and likely higher.
Matching Amazon Echo Sales Data Points
Here are some relevant data points. The Information reported that Amazon expected to sell 3 million units in 2016 and 10 million in 2017. However, Mary Meeker suggested that about 4 million were sold through Q1 2016 based on updated CIRP data which would mean that rate of sales was approaching 1 million per quarter with just over 3 million sold through the end of 2015. To square the CIRP numbers we would have to assume that Echo sales averaged about 550,000 over Q2-Q3 of 2016.
CIRP had another note suggesting that 1 million Echo units were sold during the 2015 holiday shopping season. Last year, Amazon Echo was selling for $179 and was supported by fewer than 100 3rd party Alexa skills. This entire holiday season, the original Echo has sold for $139 and the Echo Dot for about $40. There are now over 6,000 Amazon Alexa skills which offer greater utility for users. And, CIRP’s November research note suggested that Amazon customer awareness of the Echo has grown from 40% in Q3 2015 to 69% today. Last year, the Echo was only available in the U.S. Today it is also available in the UK and Germany.
Finally, Voicebot reported that Echoes were sold out on Amazon before Christmas and GeekWire suggests that U.S. Echo stock-outs may have occurred as early as December 15th. There were still some units available in the UK as of December 20th but indications were that they were moving fast. So, we have:
- Lower prices
- More utility for users because of thousands of more skills
- Higher levels of consumer awareness
- Two new countries to sell into
- Depleted inventory at least in the U.S.
And, we saw earlier this week that the Alexa app was among the top five downloads on Apples app store. It seems a safe estimate that more than 1 million units were sold in Q4 2016. Even Amazon’s original estimate of 3 million units for 2016 would place the total units sold past 6 million for end of year. The question is whether 7 million is in the cards.
The Math for 7 Million
In 2015, 0.3% of the U.S. population or 0.8% of U.S. Households purchased an Amazon Echo when it was viewed as a novelty. If we apply these same ratios to the UK and Germany which are new this year, that would yield sales between 450,000 – 510,000. Taking the more conservative figure and adding it to the Q3 CIRP number, we have 5.55 million units sold in 2016 before accounting for U.S. Q4 sales. If the U.S. Q4 sales exceeded 1.45 million units, a 45% increase over 2015, then 7 million is the likely number of units in circulation at the end of 2016. That would also suggest Amazon sold just over 4 million Echo units in 2016, 33% ahead of its internal forecast as per The Information.
So did Amazon sell 4 million Echoes this year and surpass 7 million in circulation? It seems likely assuming they had 1.45 million in stock to sell in Q4.
What This Means
Whether the final tally is 6.5, 6.8 or 7.0 million, two things are clear. First, home-based voice assistants are popular with consumers. Second, Amazon has a strong lead among consumers that Google, Apple and others will have a hard time displacing. There is a theory that consumers will adopt one primary voice assistant and it may be hard to replace the first one that becomes embedded in their lives. Voicebot projects that consumers will use multiple voice assistants with some that are task-specific and others that are general purpose. What seems clear is that Amazon is on track to have a presence in this market for the long haul and everyone else must play catch up.