Amazon Sparks Price War In Smart Speaker Market

Amazon has sparked a price war in the voice-activated smart speaker market that helped make its Echo Dot the number one product on its website during Black Friday. The price cuts by the eCommerce giant are prompting rivals to follow suit with their own devices.

According to news in The Wall Street Journal, the newest version of Amazon’s Echo speaker is selling for around $100, which is half the price of the first generation Echo it rolled out three years ago.

Rivals have taken note. Google Home, for instance, is close to 40 percent lower in price, selling for $79 for a limited time. The Home Mini is currently priced $29.

Meanwhile, Apple has opted to delay the launch of its HomePod, a smart speaker that will sell for $349 and will be available after the holidays. The HomePod will be priced higher than Amazon’s Echo Show, which is its top-of-the-line, voice-activated speaker, boasting a screen and a price tag of $150.

“Amazon is all about driving [speaker prices] to the bottom, because for them it’s an entry point for eCommerce,” said Holger Mueller, a principal analyst at Constellation Research, told the Wall Street Journal.

The newspaper also noted that in the past it used to take many years for price cuts of consumer electronic gadgets to decline by such a steep amount. The ASP (average selling price) for smart speakers have declined by greater than 50 percent in under a year, noted the Wall Street Journal, citing the Consumer Intelligence Research Partners.

By comparison, smartphone prices have fallen 32 percent over the past decade. However, Apple and Samsung continue to drive prices higher, not lower. When it comes to smart speakers, consumers may not be willing to pay a lot, given the fact that technology is limited and isn’t controlling homes in a broad way yet. The speakers will have to do a lot more to get consumers to consider them as valuable as a smartphone, laptop or TV.