How Amazon Can Succeed With Ear Buds When It Failed With Phones

Alexa's Echo installed base of @100 million is smaller than Apple's iPhone base but much larger than its HomePod. AirPod (ear buds) could be at the 100 million mark in two years.

Strategically, this means that if Amazon is able to produce an ear bud with design and features that compete successfully with the AirPod, it could seriously challenge Apple at its phone and service core. But consumers want convenience and utility, meaning Amazon will have to partner with other service providers to make this a hit. JL


Lisa Lacy reports in Ad Week:

Amazon is developing Alexa-enabled earbuds to take on Apple’s AirPods. Amazon’s Fire Phone was released as an iPhone competitor, but sold less than 35,000 units because users thought it was boring, gimmicky and too expensive.One of Amazon’s mistakes with Fire Phone was a scan-and-buy feature for Amazon products (which) seemed heavy-handed. It should focus on “ freaking amazing experiences first.”Amazon needs to figure out cross-platform functionality, so consumers can use Amazon earbuds as they would any mobile device. That means integrating with other ecommerce and music platforms.
Amazon is reportedly developing Alexa-enabled earbuds to take on Apple’s AirPods. Analysts say it has a chance to succeed—but only if it learns from its mistakes with the Fire Phone.

Citing “people with knowledge of the plans,” Bloomberg reported Amazon’s earbuds will have similar functionality (although the ecommerce platform is shooting for superior sound quality) and they could be available in the second half of the year.
Despite initial complaints AirPods looked like electric toothbrushes and would be easy to lose, they have since been embraced by Apple’s loyal fans. Figures from Apple analyst Ming-Chi Kuo project sales will grow from about 15 million in 2017 to 50 to 55 million in 2019—and 100 to 110 million in 2021. In addition, Kuo said less than 5 percent of iPhone users have AirPods, so there’s huge opportunity for growth. (They also make it more expensive for users to leave the Apple ecosystem.)
Amazon did not respond to a request for comment, so its plans remain to be seen. However, Kuo forecasted this very competition last year between Amazon and Google in particular, as the former leverages its popular voice assistant and the latter taps into its sizable Android ecosystem.
In head-to-head competition, Amazon and Apple have one win and one loss apiece. Amazon’s Fire Phone was released in 2014 as an iPhone competitor, but reportedly sold less than 35,000 units and was discounted not long after in part because users thought it was boring, gimmicky and too expensive. Since then, however, Amazon has reportedly sold 100 million Alexa-enabled devices, with an additional 40 million anticipated this year. Apple, on the other hand, has just a fraction of the smart speaker market and is expected to sell only 11 million HomePods in 2019.
So while it’s hard to handicap the race to earbud domination, here are four things Amazon needs to do to prevent another flop:

1. Price

AirPods start at $159, so Amazon consultant William Tjernlund said he doesn’t think the retailer has to do much other than offer a comparable product at a lower price.
“If they can sell a legit AirPod competitor that retails at $49.99, they will win a lot of customers,” he said. “If you look at almost all consumer electronics on Amazon … the bestseller is almost always some brand you have not heard of that has a super low price. Low price is still king. Amazon is the low-price king.”

2. Design

Apple is known for beautiful design, but it took even its rabid fans a bit longer to warm to white sticks that would distend from their ears. That’s why Alexandra Kirkland, partnership manager at voice platform Jetson, said design is key—and if Amazon’s version is more aesthetically pleasing than AirPods, it may be able to win over customers.

3. Cross-platform functionality

For his part, Jim Jacobs, president of market research company Focus Insite, said Amazon needs to figure out cross-platform functionality, so consumers can use Amazon earbuds as they would any mobile device. That means integrating with other ecommerce and music platforms.
“This is an absolute gold rush for Alexa—people want convenience, and Amazon has to do this right on the first try,” he said. “Otherwise, the product launch will sink quicker than the Titanic.”

4. Unparalleled experience

According to Steven Fischer, director of digital strategy at media company Bader Rutter, one of Amazon’s mistakes with Fire Phone was a scan-and-buy feature for Amazon products called Firefly because it seemed heavy-handed. Instead, it should focus on “delightful, educational and freaking amazing experiences first.”
There is also an opportunity to encourage developers and brands to build Alexa-enabled audio experiences.
“Imagine putting on Amazon Echo headphones and taking an augmented audio-reality tour of a local garden or art museum,” he added.