Following the news that Amazon has introduced a new line-up of Echo products—the all-new Echo Pop, Echo Show 5 and Echo Show 5 Kids, and all-new Echo Buds;
Ardit Ballhysa, Technology Analyst at GlobalData, a leading data and analytics company, offers his view:
“Amazon’s product line-up of Echo, Kindle, Ring, Fire, Blink, and Key devices continues to grow at pace. This time around the company expanded on its Echo range of products by announcing two new devices – the Echo Buds and Echo Pop – and updated its existing Echo Show lineup with the Echo Show 5 and Echo Show 5 Kids.
“These devices do not advance Amazon into new markets as they are not new product categories within the company’s product portfolio, despite the ‘all-new’ label assigned to two of the four new devices. The company already sells earbuds in the form of its second-generation Echo Buds with active noise cancellation (ANC) that released in 2021.
“Amazon does not release sales figures for its Echo Buds with ANC, but according to industry reports the company is struggling to take any meaningful share from other players in the true wireless stereo (TWS) market. The $49.99 retail price of the new Echo Buds is a hint that Amazon is not content with its position in the market and is eager to gain share by undercutting offerings from rivals, including leaders Apple and Samsung. This is a typical strategy deployed by Amazon as it frequently sells devices at cost in the interest of increasing user engagement across its services. In this case, the aim is to increase the use of Alexa, which the company noted during the press release will ‘add even more generative AI powered experiences…throughout the year’.
“Meanwhile, the Echo Pop is just another small, inexpensive speaker, albeit in a new form factor. The device is like the Echo Dot in form, price, and function, as they are both compact speakers, have a price difference of $10 between them (with the Echo Dot being the slightly more expensive one at $49.99), and are advertised for bedrooms or small spaces. While, again, Amazon’s goal is to drive the use of and access to Alexa through selling inexpensive devices, the strategy here is not without its drawback as the similarity in price between the Echo Pop and Echo Dot could lead to cannibalized sales of one or the other.
“In the current age of explosive interest in and growth of AI, where companies are frantically running around searching for ways of not getting left behind, the reward to Amazon of increasing Alexa use is well worth the risk of cannibalizing sales of its Echo Pop or Echo Dot, especially as the company’s future AI services will be funnelled through Alexa. These new devices will help continue drive Alexa usage owing to their affordable price points, despite not being innovative or providing consumers with unique use cases.”
