Amazon’s Hardware Is the Ultimate Black Box

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Financial details of the growing device lineup have never been reported, but payments to Amazon are likely significant.

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The latter two qualify as headline-grabbing gizmos, which are unlikely to generate much in the way of sales volume. The robot alone cost $1,000 and was displayed mostly as a rolling videophone used to keep an eye on aging parents. In fact, both the Astro robot and drone are being sold on an invitation-only basis as the so-called Day 1 Edition — an Amazon program that gives out early versions of new products to a select group of buyers.

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David Limp, Amazon’s Head of Devices and Services, told Wired magazine That the company is hoping customers will provide more “unique use cases” for the robot.

But Amazon’s hardware efforts shouldn’t be underestimated based on its more oddball efforts — or even known flops such as the Fire Phone. Beginning with the first Kindle e-reader in late 2007, Amazon has racked up some significant hits that have either pioneered new market segments or taken a strong position in existing ones. According to Canalys, the company’s Echo lineup sells more than 35 million devices annually and has led the smart-speaker market with a 30% share over the past two years.

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According to data from Parks Associates, Amazon’s Fire TV has long been second only to Roku among streaming TV devices in North America.

It remains to be seen whether any of the company’s latest gadgets will reach those levels, though the success of the Fire TV lays a strong foundation for new TV sets that start shipping later this month. But while Amazon’s hardware business may be the largest of the big tech companies named Applehandjob

Investors are still mostly in the dark about its impact on the overall company. Amazon has vehemently refused to measure the trade, and some Wall Street analysts have attempted either. That’s only a tiny fraction of Amazon’s $443 billion in revenue over the past four quarters. But even Microsoft reports sales data for its Surface devices, which accounts for less than 4% of the software giant’s total annual revenue.

Of course, the financial impact of Amazon’s devices goes far beyond their initial sales. According to the Association of American Publishers, Kindle has virtually built the eBook business that now generates more than $1 billion a year in US sales alone. And the Echo speaker has helped make Amazon a player in music streaming; A survey conducted by Evercore ISI earlier this year found that Amazon Music was the second most popular paid streaming service after Spotify.

Mr Limp said on Tuesday that Amazon aims to build devices that are “deeply integrated with services.” Subscription services are now generating about $29 billion a year in revenue for Amazon, and Wall Street expects that to reach closer to $40 billion by the end of next year. That too without a robot roaming your house.

Dan Gallagher [email protected] . Feather

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