Should Google Seed Every US Household With A Free Home Mini AI Speaker?
Alphabet is one of the largest and most valuable companies on the planet, and at least one Morgan Stanley analyst is suggesting that the company use its cash pile to gain the upper hand in a growing market sector. In this case, Morgan Stanley analyst Brian Nowak says that Alphabet subsidiary Google should give away millions of its Home Mini AI smart speakers.
In fact, he suggests that Google should give away one Home Mini for each American household in order to gain a leg-up on market leader Amazon. Amazon has just over a 60 percent share of the smart speaker market in the United States, compared to around 30 percent for Google.
With a retail price of $49, Nowak is estimating that this venture would cost Alphabet around $3.3 billion, which he considers a "small price to pay" for the long-term ad revenue that could be generated from such a move. It's estimated that Alphabet could stand to gain five times that amount in profits through retail search gains.
“We argue Alphabet needs more devices/smart speakers in people's homes. The growth of voice shopping combined with Amazon’s expected install base advantage could threaten long term growth in Alphabet’s high-monetizing retail search category,” said Nowak in a research note. “Like the mobile transition when Alphabet gave Android to OEMs and began paying Apple to power Safari search, we believe Alphabet should give away a Google Home Mini to every US household.”
A number of companies are vying for a chance to take over your living room, kitchen or even bedroom with AI speakers. The market leader is without question Amazon with its Echo family, but Google is making a strong showing with its "Home" family of AI speakers. Apple is just now getting to the market with its fledgling HomePod while Microsoft is an also-ran with the Cortana-backed Harman Kardon Invoke smart speaker.
Amazon's lead is no doubt solidified by relative low pricing (the Echo Dot has an MSRP of $49.99, but can sometimes be had for as little as $29.99), a large variety of devices, and a vast number of available Alexa Skills.
But for Alphabet to actually give away free hardware in an effort to get an advantage over Amazon may strike some as being a bit over the top. We’re talking about two mega-billion companies here -- there has to be a better way, right? But Google gave Android away for free to OEMs in order to gain an advantage over Microsoft’s licensing mobile with Windows Mobile. It worked for software, why couldn’t it work for hardware? Alphabet potentially wouldn’t even have to give the devices away for free, but it could heavily subsidize them to make the pricing even more attractive.
However, Alphabet might counter that it doesn't have to make such a dramatic move. The Google Home is already gaining ground on Amazon Echo according to Canalys. The firm's Q1 numbers showed that 3.2 million Google Home smart speakers shipped during the quarter compared to 2.5 million for the Amazon Echo.
“Google has several advantages over Amazon that have helped it move ahead,” said Canalys Analyst Ben Stanton back in late March. “But its biggest advantage is in the channel. Operators and retailers tend to prioritize Google’s speakers over those from Amazon, as Amazon is in the tricky position of being a direct competitor."
What say you, Hot Hardware readers? While we're not ones to turn down free hardware, do you think that Alphabet really needs to go this route in order to achieve search/ad dominance in a growing market?