What the Gizmodo Article Says
- Amazon dropped the Echo Pop’s price from $39.99 to $21.
- At that price, Gizmodo argues Amazon “makes virtually no margin” or might lose money per unit.
- The Echo Pop is their cheapest Alexa speaker, but still offers full Alexa capabilities, 4 mics, a directional front speaker, Bluetooth + Wi-Fi, etc.
- Gizmodo frames this as a market-penetration / loss-leader strategy: Amazon may be prioritizing getting more Alexa devices into homes over making money from each Echo Pop sold.
Supporting Context: Amazon’s Echo / Alexa Strategy
- According to Ars Technica, Amazon’s Devices division (which includes Echo) reportedly lost $25 billion from 2017–2021.
- The article suggests that Amazon has no firm profit timeline for Alexa hardware — meaning they’re OK subsidizing these devices to grow usage.
- Earlier, TechCrunch noted how Amazon intentionally prices the Echo Pop below the Echo Dot, making it a “very cheap entry point” for new Alexa users.
Analysis: Why Amazon Might Be Selling Echo Pop at Near Zero Profit
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User Acquisition
- By offering a very cheap Alexa device, Amazon can onboard more users to its ecosystem.
- Once users have Alexa in their home, they may use it for shopping, entertainment (Amazon Music, Audible), or smart home — generating revenue in other ways.
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Hardware as a Loss Leader
- Amazon’s willing to sell Echo devices at low or no margin. Their strategy seems focused less on hardware profit and more on long-term value from device users.
- This aligns with reports of Amazon accepting big losses in its Devices business for strategic growth.
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Clearing Inventory
- The price cut to $21 may also be a clearance move — perhaps to make space for new models, reduce inventory or boost volume during a sale season (e.g. Black Friday).
- Gizmodo even notes Amazon may be “just to clear inventory.”
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Smart Home Expansion
- A super cheap smart speaker could act as a gateway device for users to adopt other Alexa-enabled devices — or use Echo Pop as a Wi-Fi extender (via eero).
- With more devices, Amazon increases its chances of recurring revenue from services / subscriptions.
Caveats & Risks
- We don’t have Amazon’s exact cost per unit, so “zero profit” is inferred, not confirmed. Gizmodo’s wording (“virtually no margin”) suggests it’s speculative.
- Even if Amazon is making a loss now, long-term strategy might pay off via:
- more Alexa usage
- more purchases made via Alexa
- more smart home adoption
- Selling hardware cheaply is risky: if too many units are sold at a loss, it could dent their hardware margin unless there’s enough upside in service monetization.
- It’s also possible that this is a temporary sale, not a permanent MSRP drop, which could affect the “loss” argument.
Product Reference
- — That’s the device being discussed.
My Conclusion
- Yes, it’s very likely Amazon is making very little or even a loss on the Echo Pop at that $21 sale price.
- This is probably a deliberate strategy: subsidize the hardware to boost Alexa’s reach and lock in users to the Amazon ecosystem.
- For consumers, this is a great deal. For Amazon, it’s a long-term investment in its voice assistant and smart home business.
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