From Kindle e-books to Alexa speakers, why is Amazon always "selling" its hardware products cheaply?
At the beginning of December, Amazon's long-rumored plan to lay off 10,000 employees has finally locked in the first batch of targets. According to the British "Financial Times" report, Amazon decided to streamline the team first, from three devices: the Alexa voice assistant and speakers, the Kindle e-reader and the Halo health monitoring bracelet.
Among them, the department where Alexa is located has the most personnel and the most losses. According to Business Insider, the Alexa team alone has more than 10,000 employees, and the team's loss in 2022 is about to exceed $10 billion. According to ABI Research, Amazon loses several dollars for every Alexa device it sells.
Take the Echo Dot smart speaker, for example, which sells for $50 and has a cost estimate of about $31, but is actually often on special sale for $29. As an 8-year-old department, Alexa took advantage of the wind when tactile interaction transformed into voice interaction, but it has not been able to break free from losses. The same result can also be seen from the earlier Kindle e-reader and the later smart wearable wristband.
Taking the Kindle with more data as an example, iSupply once disassembled the Kindle and concluded that its parts and assembly cost $185.29, but the actual selling price was only $189, with almost no profit at all.
Hidden behind this is Amazon’s unchanging idea of building hardware devices: not seeking to make profits from hardware sales, but seeking to obtain higher gross profits from users’ subsequent use of software, acquisition of digital content, and platform reliance, income.
Just as the Echo smart speaker is to the Alexa voice assistant, the Kindle screen is to the e-book mall, and the health monitoring service is to the Halo bracelet. However, when Amazon discovered that most users would only summon Alexa when asking about the weather and playing music, the company slightly adjusted its sales strategy: the Halo bracelet cannot be purchased separately, but needs to be ordered at the same time as the subscription service. But even with such a bundle, the business model of Amazon’s equipment business, which is both soft and hard, still seems to be unable to work.
