Amazon's strategy for devices is to generate "Downstream Impact"or DSI. That is, if you buy a Kindle Ebook reader, you are probably going to buy high margin Ebooks from Amazon. The hope was that if you had an Echo in your home, you would impulsively order products from the Amazon store. Subsidize the device in order to generate profit from high margin complementary DSI purchases. Turns out, not so much for the Echo.
Echo and other devices are generally sold at or below the cost to make them. The devices team, in internal pitch meetings to senior management, would claim the top end of a range of estimated revenue from downstream impact, some of the people said. The team relied heavily on the metric to justify costs related to Echo and other devices and the growing size of staff devoted to the business, which at one point swelled to more than 15,000 employees across all its products.
Sufficient DSI has not materialized for other Amazon devices such as game streaming on Luna, an in-home robot Astro, a video-calling gadget Glow and the Halo fitness tracker. The last three are discontinued or will soon be. With 500 million Echos in use, it might be hard to discontinue.
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ReplyDeleteEcho and other devices are generally sold at or below the cost to make them. The devices team, in internal pitch meetings to senior management, would claim the top end of a range of estimated revenue from downstream impact, some of the people said. The team relied heavily on the metric to justify costs related to Echo and other devices and the growing size of staff devoted to the business, which at one point swelled to more than 15,000 employees across all its products.
Sufficient DSI has not materialized for other Amazon devices such as game streaming on Luna, an in-home robot Astro, a video-calling gadget Glow and the Halo fitness tracker. The last three are discontinued or will soon be. With 500 million Echos in use, it might be hard to discontinue