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Amazon Echo's Holiday Sales Hint at Huge Market to Come

Echo Dot tops Amazon's best-seller list

Amazon said sales of its Echo line of devices, powered by Amazon's Alexa virtual assistant system, surged more than ninefold over last year's holiday season, with both the Echo and the smaller Echo Dot topping its best-sellers list.

Digital Voice-Activated Assistant Device Shipments Worldwide, US vs. Non-US, 2015-2020 (millions)

The $179.99 Echo won't be in stock on Amazon.com until Jan. 26. Holiday shoppers cleaned out the stock of the voice-activated virtual assistant device well before the end of the shopping season.

Amazon said the $49.99 Echo Dot, introduced this year, was the best-selling and "most gifted" item of the year, with millions having been sold since its introduction. Other Alexa powered devices including Fire TV Stick and Fire Tablet also made the top-selling list, the Seattle-based online retail giant said.

"Echo and Echo Dot were the best-selling products across Amazon this year," said Jeff Wilke, CEO Worldwide Consumer, Amazon. "Despite our best efforts and ramped-up production, we still had trouble keeping them in stock."

Echo's sales signal expanding consumer interest in devices featuring virtual assistants and suggest there's plenty of room for growth. Indeed, this year's sales volume could be just the tip of the iceberg. In August 2016, Strategy Analytics estimated that 1.8 million digital voice-activated devices (most of them Amazon Echo) would be sold in the US in 2016, with just 2.3% of US households having one of the devices. The penetration rate was projected to reach 11.5% by 2020.

Rising sales of digital assistants reflect changing user behaviors as more people become comfortable with the idea of spoken word commands and queries. In September 2016, Google said that fully one in five search queries on its mobile app were voice initiated. And in November, a Google/Ipsos survey found that more than half of the smartphone users had used a voice-activated app to answer a question or perform a task.

Amazon said Tuesday that popular requests made to Echo over the holidays included queries about mixing cocktails and requests to play holiday music.

—Andria Cheng

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