Pricing has a been a big part of Amazon’s strategy for proliferating sales of Alexa-based voice assistant products. Part of this strategy has been an Amazon Echo product line that includes three different price points ranging from $49 to $179.
However, Amazon has also used frequent discounting. The Echo has often been discounted to $139 in the US and the Echo Dot has even reached $39. Now the Echo is selling for £5 less than Google Home in the UK at £124. This has come just a week after Google’s many feature announcements that were designed to let users know that the company plans to match and go beyond all of Amazon Alexa’s many capabilities. Whether those features materialize or not, they may make Google Home attractive to consumers even though it lacks capabilities such as device-to-device calling that Alexa provides today.
The Master Merchandiser
Amazon is never idle. It already has the lower-priced Echo Dot for £49 in the UK. Just in case a consumer wants the better speaker, Amazon is offering its flagship Echo product below the cost of Google Home. Google builds some impressive products, but Amazon is a master merchandizer and will continue to leverage that strength in building market share for Alexa-based products.
Two more Alexa-based products are coming your way with the Echo Look and Echo Show at $199 and $229 respectively. That will give Amazon five products ranging from $49 to $229 in the US, each with a rationale for the different price points and all at a lower cost than its rivals would like to sell these products. The Look and Show aren’t available in the UK yet, but you can expect them by the fall unless product or supply chain problems emerge.
Competing on Price, Features or Both
There is no discount yet in Germany, but there is no Google Home for the country today. Google announced that this will change “this summer” and you can bet that a fresh round of Echo discounting will roll-out at the same time. Google is accustomed to competing in the smartphone market where it worked to match and exceed iPhone features. In mobile, Google had some premium products, but its partners also dominated the low-price end of the market. Android was available to the masses at discounted prices and in a variety of products.
Amazon has been a different type of competitor. It has held a feature advantage in part due to a two-year head start and is comfortable competing on price and product variety. Google must do more than just compete on features. It must match price and be prepared to offer product variety. The company’s value proposition is always about having the most users. Google Search, YouTube, and Android are all dominant globally. The mass market is heavily influenced by price competition and product choice. This may be the harder challenge for Google to tackle as it adjusts to Amazon’s competitive style.