The chess move? Amazon used the heavily promoted Prime Day to sell as many Amazon Echo devices as they possibly could, in part in an effort to disrupt Apple’s entry into the market with December’s HomePod rollout.
Brian Sozzi, writing for The Street:
Amazon said that it sold three times as many Echo devices worldwide midway through Prime Day. Imagine what the grand total looks like seeing as Amazon was hawking the smart speaker for a low, low price of $89.99. What this means to Apple is rather simple to understand: Amazon has managed to stuff more homes with Echos in front of Apple’s major HomePod launch. Hence, if you bought a discounted Echo why in the world would you want a HomePod, too?
While I do agree that Amazon is doing everything they can to maximize their home assistant market share in advance of Apple’s entry into the market, I disagree with the premise that Amazon is making big headway in eating future HomePod sales.
First, there’s price. $89.99 is a low enough price that it will not prevent someone from spending $349 to buy a HomePod. If the Echo was, say, $299, this might be a different story. But the vastly different prices puts the products in different market tiers.
Then, there’s capability. The HomePod gives inside access to the Apple ecosystem. The most likely candidates for a HomePod purchase have already invested in an Apple product, have made a little ecosystem nest out of music, files, apps and, most importantly, experience. While they might pop for $89.99 to give Alexa a try, I don’t see that sunk cost being enough to stop an Apple folk from buying into HomePod.
And folks who’ve heard both systems consistently say that HomePod is head and shoulders better sounding than Alexa when it comes to playing music.
What Amazon has not done is deliver a better quality speaker system which is also compatible with Apple Music. While Echo can act as a dumb Bluetooth speaker, you’d still need your iOS device or Mac in the loop to control the Apple Music experience, and that defeats the purpose.
I see HomePod entering the market in the same way as Apple Watch. The market is crowded, but crowded with devices that offer no real advantage to the Apple ecosystem. And to me, that’s all the difference in the world.