Amazon’s annual sale extravaganza, Prime Day, is more centered around technology products each year, with giveaways and steep discounts on Apple MacBooks, Microsoft‘s Surface products and even Google Home devices.
But perhaps more telling is a much less flashy deal: Four months of unlimited music for 99 cents through Amazon. It’s a deal that targets rival Apple where it hurts: content.
Apple recently debuted the HomePod speaker, a rival to Amazon’s Echo device that is distinctly focused on music, rather than being a voice-activated assistant. While subscribers to services like Spotify and Pandora already can access those services via Alexa, Apple users haven’t had the same luxury. Alexa, the Echo’s virtual assistant, still does not support Mac OS X devices.
Apple has been similarly cold toward supporting Amazon’s video content, with Apple TV just introducing support this year, despite the fact that an estimated 85.3 million people in the U.S. will watch Amazon video at least once a month this year, up 11.9 percent over last year according to eMarketer estimates.
Now the uneasy partnership between Amazon and Apple faces one of its biggest tests. A survey by Raymond James analyst Tavis McCourt estimates that 14 percent of iPhone users plan to buy a HomePod, while 16 percent plan to buy an Amazon Echo product.
EMarketer estimates that Amazon has 44.1 percent of American over-the-top streaming video viewers, at 193.3 million.
“Apple should have been dominant in the living room with Siri. They had a great product,” Walter Isaacson, president of the Aspen Institute, told CNBC’s “Squawk Alley” on Monday. “They’re going to try to get into it in three, four, five months. They’re going to have the third mover disadvantage, because Google and Amazon are already there. And now Amazon is wrapping itself up with that personal assistant that you can talk to with a Prime Shopping day. And so it’s not just about streaming video and music, where Amazon [is] also very good.”
Amazon’s made-up shopping holiday comes as technology companies are investing more heavily on content on a way to keep users on their platforms. Apple hopes that its services division will double by 2020 — and Pacific Crest analyst Andy Hargreaves estimates that growth from the App Store or Apple Music may be key to driving that goal forward.
And despite being known for e-commerce, Amazon has become a formidable threat to Apple’s content business, according to a report from The Wall Street Journal on Sunday. Unnamed sources told the Journal that Apple’s market share in renting and selling movies had fallen as low as 20 percent over the past few years amid more competition from cable and Amazon.
Amazon’s Echo device also holds promise to capitalize on what Apple has had for years: a network effect. Tech investor Aaron Batalion of Lightspeed Venture Partners has posited that as Amazon facilitates phone calls between its customers, more buyers will want to stay within the Prime ecosystem so they can stay in contact with other Echo users.
If history is any indication, Tuesday’s sales will be a key indicator of whether Alexa is feeling the heat from Siri. Last year on Prime Day, sales of Amazon devices were up over 3 times compared to the year-ago period.
“They’re building an ecosystem,” Isaacson said.