Amazon and Google will control, but not lead, the consumer electronics market

摘要

Black Friday and Cyber Monday saw record numbers of device sales for Amazon and Google. According to Amazon, customers worldwide bought "millions" more branded devices such as the Echo Dot or Amazon Fire TV, compared to the same period last year. Google didn't release any numbers, but we anticipate a similar uptake for its own products which were aggressively discounted throughout the period. Both companies' commitment to developing and marketing their own devices at a global level has reached an unprecedented level, sending ripple effects throughout the rest of the industry. For instance, Google recently acquired Fitbit for $2.1bn, paving the way for Google-branded wearables. However, further analysis from Ovum shows that the scale of their operations remains very small in comparison to the overall consumer electronics market, and will, in fact, diminish over the next five years (see Figure 1). Either through acquisitions or via large-scale marketing campaigns and price cuts, Amazon and Google seem unstoppable in their quest to invade consumers' homes with their own-brand electronics, even though selling devices is not part of their core business. However, a closer look at the numbers shows some weaknesses: their device portfolio in established segments such as media streamers, PCs, and smartphones is exposed to stagnating growth and strong competition, while emerging segments such as smart home security devices and mesh routers fail to scale globally. But how much does this impact their core strategy? Amazon and Google want their services to be used on as many devices as possible, not just on their own, which means that they ultimately prioritize growing the size of their services ecosystem via third-party original equipment manufacturers (OEMs) rather than via their own branded devices. So why do they do it?