Why Echo is eating the online speaker market

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Yesterday, there were a number of reports that on Amazon.com, Echo sales make up 45% of speaker sales on the site. Of course, Amazon.com does very well pumping Echo through this channel, but at least for the past year, the device was the only one in its category to have voice functionality.

The study was published by 1010data and you can see the full infographic here. There were some other interesting facts from the report:

  • Conversion rate for Echo was 1.8% — below the 2% average and well below leader Logitech at 2.5%
  • $1B online speaker market size, 89% sold through Amazon.com
  • Echo had a 67% YoY growth from August-August

OK, back of napkin calculation time… based on these figures, $1B x 89% x 45% = $400M in Echo sales or 3M devices sold (if you say an average sale price of $120 between the Echo Dot, Tap, and main Echo. And if it’s 67% YoY, that would mean if 3M were sold this year, 1.8M were sold last year. So an estimate of 5M+ Echos sold wouldn’t be out of this world.

So why is this the case?

  • Amazon is heavily marketing the Echo and Alexa products
  • Up until recently, the Echo has been the only AVS enabled device. In terms of voice interaction, it has been the only one market by a major player.
  • There is an education factor in using the Echo, which is why the conversion rate is likely lower than the Logitech speaker and why it would take time to see growth (it needs to be tried by others first)
  • The price point is similar to other higher end BT speakers BUT the Echo has 10x the functionality (with far field voice) and has WiFi capability. Amazon is taking a gun to the knife fight.

As other AVS products come to market, this growth will likely slow but the number of Alexa end points will mushroom.

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Independent daily thoughts on all things future, voice technologies and AI. More at http://linkedin.com/in/grebler

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