Google and Amazon likely lost money on smart speakers this year

Amazon and Google were extremely aggressive with their small smart speakers this holiday season, cutting the price on both the Echo Dot and Google Home Mini to just $29 for months. That was down from a $50 price point on both units before Q4.

That move was great for customers, and I’m sure both Google and Amazon sold a ton of units to holiday shoppers, but analysts have one problem with it; both companies probably lost some money selling them so cheaply.

That sounds like common sense, but really, when you have an already cheap speaker being discounted 40% at basically every brick and mortar location, it’s hard to see how either Google or Amazon could’ve pulled any profit from the devices. The bigger speakers probably made up for some of that, but even the Google Home and Echo were discounted to $79 just like the mini versions.

With all of that being said, these devices probably aren’t made to be high-margin items for Google or Amazon. They’re made to get people acclimated to Google Assistant or Alexa, which then opens things up to selling more connected devices, making purchases from online storefronts, or subscribing to music services. Amazon’s no stranger to this game, but it’s slightly newer territory for Google.

Did you pick up any smart speakers over the past few months at their discounted pricing?

source: Reuters

About the Author: Jared Peters

Born in southern Alabama, Jared spends his working time selling phones and his spare time writing about them. The Android enthusiasm started with the original Motorola Droid, but the tech enthusiasm currently covers just about everything. He likes PC gaming, Lenovo's Moto Z line, and a good productivity app.

  • John Coleman

    Imagine the money the will lose once they start broadcasting ads on their smart speakers.

  • Darkcobalt

    I’m not convinced that the analysts estimates are particularly accurate. The Google Home Mini sold for $29USD during the holidays and supposedly contained $26 of parts, but Google and Amazon were manufacturing these in huge volumes and the hardware quality of the Google Home Mini isn’t that of a $50 product. Many equivalent products from China sell for very low prices, and I believe the Smart Assistant aspect of Google Home/Echo Dot are powered by the web, so there’s no expensive on board processing. The value of these smart speakers is in their cloud software, which doesn’t have a fixed hardware cost.