Google targets Amazon's smart speaker price advantage (GOOGL, AMZN, GOOG)

US Smart Home Device Ownership

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Google will reportedly unveil a smaller, less expensive version of its Google Home smart speaker this fall at its hardware event, according to Android Police.

While not much is known about the device currently, Android Police speculates that it would have all the capabilities of the current Google Home, such as music streaming, smart home control, and weather updates, but would cost substantially less than the speaker's current $129 price.

Such a device would be a clear play at Amazon's price advantage in the smart speaker market.

Amazon's lower-end Echo Dot catapulted the product line into the lead in the market. Amazon made a similar play to great success. The firm's original Echo, introduced in 2014, was priced at $199. But last year, the firm released a revamped lower-end offering, called the Echo Dot, for $50. That device's popularity propelled the Echo's installed base to 9 million US households — a figure that continues to grow by the day. Google is likely looking for similar results from its move.
And Google could benefit from such a gain in the smart speaker market. Google has the second-largest share of the smart speaker right now, but it still isn't close to encroaching on Amazon's lead — only about 2% of respondents to a 2017 Business Insider survey own a Google Home. But such an inexpensive device could entice new users, including those that already use Google's Android mobile OS. Even on top of device sales, that could broaden Google's potential revenue opportunity by increasing the number of users Google could potentially serve ads to.

Meanwhile, there could be broader ripple affects across the rest of the market. The smart speaker market is growing across the board — global consumers will spend $2.1 billion on smart speakers by 2021, according to Gartner — which is bringing new entrants, like Apple and Microsoft, into the space. But their offerings are likely to be costly, which could be a setback, since high prices are a top turnoff for potential smart speaker buyers. As the market expands, Google and Amazon are likely to keep their edge, and the lower end of the category could be a top driver of growth and overall market gains. If they see success, it's likely we'll see other new entrants lower their prices or introduce new, less expensive, secondary devices.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the US smart home market that:

Analyzes current consumer demand for smart home devices based off results from BI Intelligence's proprietary survey.
Forecasts future growth in the number of smart home devices installed in American homes.
Analyzes the factors influencing the proliferation of voice control devices in the homes.
Identifies and analyzes the market strategies of various companies that have integrated voice control into their smart home ecosystems.

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