Amazon Goes Low with Prime Day Sale Prices on Smart Speakers and Smart Displays and Hopes for Consumer Lock-in with Smart Home
Prime Day kicked off a few hours ago and as expected prices on smart speakers and displays are aggressive. Amazon continued the low pricing on the Echo 2nd Gen smart speaker which has been selling at 50% off for just $49.99 for more than a week now. It also has taken the $49.99 list price Echo Dot 3rd Gen which often sells for $25 down to $22. And, if you purchase three, the price falls further to $20 each. The Echo Plus, which is rarely discounted, is also on sale for $110, down 27% from its $150 list price. The smart speaker gives you all of the features of Echo 2nd gen, but has a larger woofer and tweeter delivering higher sound quality and more importantly for smart home aficionados, Zigbie connectivity.
You likely expected the list price of the Echo Show 2nd Gen smart display to be discounted and you would be right. It is selling today for $160 down from its list price of $230. However, the new Echo Show 5 which launched last month for $90 and was recently selling for $70, is today selling for just $50. There are discounts across nearly the entire Echo and smart home product line including Fire TV with Alexa Remote, Fire TV Cube, Echo Input, Recast TV, and others. Notably, the Echo Spot, Echo Look, Echo Sub, Echo Link, and Amazon Smart Plug are not discounted as of this morning.
Google and Walmart Respond
Walmart running its new Prime Day counter sale called, “The Big Save” and it has some Google Home and Nest products prominently featured. Google Nest Hub (formerly the “Home Hub”) is selling for $79 down from a list of $149. Google Home is priced at $69 down from $129 and Google Home Mini is $25 off of a list price of $49. Google’s own store has similar pricing and has for some time now with one difference being it now shows a Google Home list price of $99.
You might notice that each of these prices is materially higher than Prime Day sale pricing for comparable Amazon Echo products. Walmart and Google could still adjust their pricing but it appears they may have decided not to match Amazon one-for-one in pricing discount for its sales extravaganza. All of these discounts are significant and not too far off of each other so they may not have a strong impact on sales volume. Many consumers have already signed up for Team Alexa or Team Google Assistant anyway so there may be some enticement of new users, but much of the activity will likely be consumers adding to their smart home collections. The active and regular discounting is surely training consumers to wait for a sale to buy these devices.
Bundles Are the Key to User Lock-in
While Amazon has many individual devices on sale today, its longer-term strategy is to focus on bundling voice-activated devices such as smart speakers with smart home devices that automate daily tasks. The price point to adopt a smart speaker and the investment in learning the platforms are relatively low. That means it is relatively easy to switch to another voice assistant platform. And, many households have devices from more than one ecosystem either because they bought them to experiment or received an alternative device as a gift.
The key then is how to establish stickiness or user loyalty to your platform. Pushing smart home devices is a key strategy. Yes, many smart home devices can connect to both Amazon Alexa and Google Assistant, but the winner is likely to be which one you set up first. Once your smart home devices are connected and working reliably with either Alexa or Google Assistant, that is likely to be your default and preferred assistant unless there is some radically better feature introduced by the alternative.
There is also another benefit. Many consumers use their smart speakers for just a few regular tasks such as listening to music, setting timers, and asking questions. Adding smart home connections makes these devices more valuable to users and increases daily activity. For both of these reasons, Amazon has many smart home and smart speaker bundles promoted as Prime Day specials. Some of those will transform consumers with loose ties to Alexa through their Echo smart speakers into more regular and loyal users.