This article may contain personal views and opinion from the author.
2018 has been a relatively uneventful year for Apple in terms of hardware releases, with a single new iPad model unveiled all the way back in March, no belated iPhone SE sequel (rest in peace), no second-gen HomePod or AirPods either, and not even that promised AirPower wireless charging mat.
The new Echo Show has a 10-inch screen, and it's still cheaper than the HomePod.
Apple clearly cannot afford to sit idly by while Amazon and Google consolidate their position at the top of the sales charts, needing something big and possibly affordable to strike back. Or does it?
Is this truly a market worth pursuing for a company that’s dominating global profits across several other industries? Should Apple perhaps quietly call it quits and focus on other emerging technologies, as well as helping smartphone sales bounce back? Above all, is Siri too far behind Alexa and Google Assistant to make the HomePod a true Echo and Home challenger? Let’s start from the beginning.
The competition
According to a Strategy Analytics report a couple of months back, the world’s second-largest smart speaker vendor is rapidly narrowing the gap to first place. But Apple only sits in fourth place, lightyears behind Amazon and Google, with a microscopic 5.9 percent share of Q2 2018 shipments.
A more recent survey of US-based Apple customers found that a measly 2 percent owned a HomePod. That’s not to say smart speakers in general are unpopular among iPhone, iPad, and Mac users. But believe it or not, even the company’s devoted fanbase is favoring the Echo and Google Home lineups.
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The reasons for that are fairly obvious, starting with affordability. You can get a $100 Echo or $129 Google Home that can do pretty much the same things as a $349 HomePod. No, superior sound quality cannot justify that huge gap. At least not entirely.
In fact, if you ignored audio performance, you’ll find the HomePod actually has a shorter list of "smart" features than its primary rivals. Yes, even after a massive recent software update that finally enabled phone calls, while also bringing multiple timers and lyric-searching functionality to Apple’s rookie smart speaker effort.
The HomePod can finally make and receive phone calls. Yay?
In case you’re wondering, the Echo and Google Home have long supported all that stuff, gaining unique capabilities at a significantly faster pace than the HomePod. We’re talking whisper interaction, email integration, and a full slate of killer child-focused features for Amazon’s Alexa-powered devices, as well as everything from ride-hailing to bilingual understanding for the Google Assistant.
Meanwhile, the HomePod is still not properly integrated with popular streaming services like Spotify or Pandora, which is perfectly understandable from a business standpoint, but not particularly user-friendly.
The money makers
Selling the largest number of smart speakers doesn’t necessarily generate the heftiest profits, a situation Samsung, Apple, and Huawei are very familiar with from the smartphone industry. Indeed, the HomePod commanded the largest share of Q2 2018 smart speaker revenue, according to Strategy Analytics, with only 6 percent of total shipments, comfortably dominating the “small but growing” premium segment in terms of sales numbers as well.
A donut-sized speaker for donut-sized profits
It’s pretty obvious something like the Google Home Mini can’t possibly yield much profit (or any at all) when selling for $49, $29, or... $0, but since that’s the most popular model in the world right now, followed by the similarly affordable Echo Dot, Apple must accept the fact this is a low-margin business for the most part.
Then again, the hardware is just a part of the equation, which is why services like Apple Music are so deeply and aggressively integrated into the HomePod package. Unless it absolutely has to, Cupertino ain’t going to share the profits generated by its smart speaker with anyone, be it Spotify, Pandora, Skype-owning Microsoft, or YouTube-owning Google.
The options
Apple is clearly no quitter, vastly improving and slowly refining its late smartwatch market arrival until reaching a point where it’s pretty much useless to try to resist its total domination over the wearable industry.
You may not remember this, but the Apple Watch was almost universally criticized and even mocked back in 2015, needing a couple of years before its true potential was realized and sales figures began to please executives and analysts alike.
Big speaker, big sound, big price
Something similar could also happen with the HomePod, although Apple may have to put even more effort into its sequels than Series 2, 3, and 4 Watches. The HomePod 2 probably doesn’t need anything as revolutionary as an ECG monitor to stand out from the crowd, but the fact remains there is a crowd of smart speakers Apple needs to catch up to.
Google isn’t going to give up this fight the same way it has buried its Wear OS platform, while Amazon’s name is already practically synonymous with the smart home. If Apple wants to compete, there are probably three big ways it can do that.
Key third-party services need to be accepted in the HomePod ecosystem, Siri needs to get (a lot) smarter as soon as possible, and/or new devices have to come with significantly lower price tags.
But two of those possible radical changes would entail reducing profit margins, which doesn’t really sound like Apple’s M.O, while the third is much easier said than done. Multiple tests have shown Siri to be less consistent than Google Assistant in answering and even understanding questions spanning key categories like local search, commerce, navigation, and general commands, despite Apple’s virtual assistant launching all the way back in 2011.
Siri is simply not good enough right now. Will it ever be?
Google has made incredible progress in just a couple of years, naturally aided by the company’s extensive expertise in search and artificial intelligence. While Apple also sees AI as the “next big thing”, Tim Cook may choose to focus on making something similar but way better than Google Glass.
Bottom line, the HomePod looks like a side project that’s not really going anywhere. It probably shouldn’t be killed altogether, generating great profits... on pretty low sales, but there’s no reason to roll out a sequel next week either. Maybe not even next year.
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Adrian, a mobile technology enthusiast since the Nokia 3310 era, has been a dynamic presence in the tech journalism field, contributing to Android Authority, Digital Trends, and Pocketnow before joining PhoneArena in 2018. His expertise spans across various platforms, with a particular fondness for the diversity of the Android ecosystem. Despite the challenges of balancing full-time parenthood with his work, Adrian's passion for tech trends, running, and movies keeps him energized. His commitment to mid-range smartphones has led to an eclectic collection of devices, saved from personal bankruptcy by his preference for 'adequate' over 'overpriced'.
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