Segmenting

With the announcement yesterday that Google was continuing its drive in the hardware with the release of the Google Home Mini, the home-tech sector is continuing its development with the three tech giants having a push at each other.

chartoftheday_11362_smart_speaker_prices_n.jpg

As with the fight between the iPad and the Kindle back in 2010, this is setting up to be a tough but highly profitable market to get into and Apple, Amazon and Google and quickly positioning themselves as the main providers. In the Kindle vs iPad fights, it became clear that Amazon was trying to position itself to enter and obtain critical mass in the ‘avid reader’ market segment by purposely providing a simple, yet easy-to-use device. But Amazon also launched its own publishing platform, Amazon Publishing, in order to squeeze publishers’ margins and take a larger chunk of the book-publishing value chain.

The Kindle and the publishing platform allowed Amazon to both provide authors with higher royalties but also reduce costs by going from writing to e-book publishing on the Kindle platform. This way, Amazon was able to keep a larger % of available profits: printing and logistical costs typically run around 40% of value for any print book.

So the home-tech sector is visibly going to become a battling ground for these giants, and the price point chosen by Google is no coincidence…

 

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