A blog post by VP of Product Management for Google Home, Rishi Chandra, and his colleague, Google Assistant Engineering VP Scott Huffman, claims that Google Home products were selling at more than one per second in Q4 2017 after the Google Home Mini launch on October 4th. That means at least 7.6 million Google Home products were purchased in late 2017.
Earlier estimates by Strategy Analytics suggest that Google was on track to sell about 2.2 million Home units in the first three quarters of 2017 before the Google Home Mini launch in October. Combining these two figures and the “more than” one per second reference suggests that Google sold more than 10 million Google Home units and maybe considerably more. Voicebot’s current estimate is 10.1 – 11.2 million Google Home units sold across the product line worldwide in 2017. Adding that to Voicebot’s estimate of 4.6 million units sold through Q3 2017 and that results in an installed base of 11.2 – 13.2 million devices.
Low Prices Drive Volume But Not Profits
Amazon Echo Dot has proven what we all know from Economics, lower price points can drive large volumes. This is where Google Home Mini has been critical to Google’s strategy. The Mini matched Echo Dot in pricing of $49 and in discounting to $29 at many retail outlets. This aggressive pricing certainly put Google Home Mini in many more households than the $129 Google Home could do on its own. It also helped Google stop Amazon from accumulating even more market share than it already commanded.
However, don’t expect large volumes of Google Home Mini sales to add to company profits. Voicebot reported yesterday that component costs for Google Home Mini are estimated at $26 and total cost of sales are certainly above the $29 discount price. The Q4 2017 strategy for Google was to drive volume with Google Home Mini while also establishing a high quality position with the $399 Google Home Max.
Revisiting 2016 Numbers Shows More Underestimates
Evercore estimated that Google Home sales in 2016 were only 500,000. Voicebot believes that the number was actually 1-1.5 million. The Chandra and Huffman blog post point to something more in the million plus range for Google Home in 2016 if we assume usage rates are similar.
All told, Google Home usage increased 9X this holiday season over last year’s, as you controlled more smart devices, asked more questions, listened to more music, and tried out all the new things you can do with your Assistant on Google Home.
We can conclude from all of this that smart speakers are wildly popular and Google is accumulating an impressive installed base of smart speaker users. It’s good news for Google and the industry. It should also entice more developers to support the Google Assistant ecosystem as the audience expands further.