The Apple HomePod: A Fundamental Shift in Smart Speaker Strategy

When it comes to smart speakers, there are two main ways to think about them. One way is to focus on personal assistant capabilities, with products like Amazon's Echo and Google Home serving as virtual assistants for controlling your home, playing music, and answering questions. However, Apple has taken a different approach with the HomePod, positioning it as a high-fidelity speaker system.

Just like the company positioned the AirPods as high-quality wireless headphones, the HomePod is marketed as a premium audio product. This fundamentally different approach makes it challenging to compare the HomePod directly to other smart speakers in the market. Despite its pricing being $300, which is significantly higher than the competition, the HomePod has still managed to capture about 8-9% of the smart speaker market. While this may not seem like a lot, it's worth noting that Apple didn't release unit sales numbers for the HomePod, but estimates suggest they sold around 2-2.5 million units in its first two years on the market.

Comparing the HomePod's performance to that of Amazon's Echo is also interesting. In its first year, Amazon sold around 2.4 million Echo units, which was a significant number at the time. However, Amazon went on to sell almost triple those numbers in the second year, while the HomePod has shown no signs of doing so. This highlights the challenges Apple faced with the HomePod's pricing and its position in the market.

Despite its struggles, it's worth noting that the HomePod is still generating significant revenue for Apple, particularly through services like Apple Music. Additionally, new software features are being rolled out to the HomePod this fall, which demonstrates Apple's continued investment in the product. The company has also announced plans to release a stripped-down version of the HomePod at a lower price point, which could help boost its sales.

The Apple HomePod: A Cautionary Tale?

However, some may draw parallels between the HomePod's struggles and that of the iPod Hi-Fi, another high-end audio product from Apple. Released in 2005, the iPod Hi-Fi was marketed as a premium speaker system for home use, but it failed to meet sales forecasts. The product captured only about 7% of the iPod speaker market at the time, which was competing with lower-cost rivals that compromised on sound quality.

Despite its failure, the iPod Hi-Fi's story has some similarities to the HomePod's struggles. In both cases, Apple didn't seem to be investing as much in the product, and rumors surfaced about a stripped-down model being released at a lower price point. However, while the iPod Hi-Fi was eventually discontinued, it's likely that the HomePod will not meet the same fate.

Instead, Apple seems to be continuing to invest in the HomePod, releasing new software features and working on a lower-cost version of the product. This suggests that the company is committed to the HomePod, even if it's not meeting sales forecasts as expected. The fact that Apple is still rolling out the HomePod internationally with its latest release in Japan also indicates that the company isn't planning to discontinue the product anytime soon.

The Future of Smart Speakers: A New Era for Apple?

So what does the future hold for smart speakers like the HomePod? While it's difficult to predict exactly how the market will evolve, one thing is clear: the smart speaker space is becoming increasingly crowded and competitive. With new players entering the market and existing ones continuing to innovate, it's likely that we'll see a shift towards more advanced features and capabilities in future products.

In this context, Apple's strategy for the HomePod takes on even greater significance. By positioning the product as a high-fidelity speaker system, Apple is taking a risk on quality over quantity. While this approach may not be for every consumer, it's likely to appeal to those who value premium audio and are willing to pay a premium price for it.

As we look ahead to the future of smart speakers, one thing is clear: the market will continue to evolve and change. However, with its commitment to innovation and quality, Apple is well-positioned to remain at the forefront of this rapidly changing landscape.

"WEBVTTKind: captionsLanguage: enWith the release of HomePod, Apple threw theirhat in the smart speaker ring after seeingcompanies like Amazon and Google experiencessuccess in the market.But Apple decided to approach the smart speakerfrom a different angle, by making sound qualitythe product’s primary focus instead of itsvoice assistant.And this created some issues that is preventingthe HomePod from competing on the same levelas the Amazon Echo and Google Home.And despite being on sale for well over ayear, HomePod hasn’t achieved the kind ofsuccess Apple was aiming for, capturing just6% of the smart speaker market at the endof 2018.And in this video we’re going to explorethe reasons why the HomePod is failing tolive up to Apple’s expectations.This is Greg with Apple Explained and I wantto thank RocketBody for sponsoring this video.RocketBody is an app that uses an ECG readingfrom your Apple Watch to measure you’rereadiness for different types of workouts.Try out the free trial today by clicking thelink in the description.Now if you want to help decide which topicsI cover, make sure you’re subscribed andthese voting polls will show up in your mobileactivity feed.So before we talk about Apple’s struggleswith the HomePod, I should mention that thiswasn’t Apple’s first attempt at makinga speaker system.Back in 2006 the company introduced the iPodHi-Fi, which was a stereo speaker designedto work seamlessly with any iPod.It actually came with 8 different docks thatyou could switch out depending on which iPodmodel you were using.And while the iPod Hi-Fi wasn’t a smartspeaker, it did share a couple similaritiesto the HomePod.First, being it focus on sound quality.There were a lot of stereo speakers dedicatedto the iPod back then, some of which, likethe iHome, were very popular.But they didn’t offer hi fidelity soundquality.And we’re seeing the same trend today withsmart speakers.The most popular of which, like the AmazonEcho and Google Home, don’t offer best-in-classsound.Instead, their voice assistant features aretheir biggest selling point.But there’s one more similarity betweenthe HomePod and iPod Hi-Fi, and that is theirprice.They both debuted with price tags of $350,which is pretty steep considering other productson the market.In fact, the HomePods competitors share thesame $100 price point as the iPod Hi-Fi’sbiggest competitor, the iHome.It’s actually pretty fascinating how similarthe modern smart speaker market is comparedto the iPod speaker market of the mid-2000’s.So it shouldn’t be to surprising that theHomePod is experiencing similar issues asthe iPod Hi-Fi.One of the biggest being sales success.Apple struggled to convince customers thatthe $350 iPod Hi-Fi offered 3.5x the valueof the $100 iHome.Sure, the Hi-Fi had better sound quality,but that was about it.And considering the iHome had a built-in digitalclock, a more compact and portable form factor,and a much more affordable price, you cansee why the iPod Hi-Fi was a hard sell.Apple eventually discontinued on the productone year after its release, just as rumorsof an iPod Hi-Fi mini were picking up steam.Now how does that circumstance compare tothe HomePod’s.Well, again, there are some similarities anddifferences.The HomePod is also having a hard time convincingcustomers that it’s worth $350.In fact, soon after it was released, Applehad to cut their HomePod orders from 500,000a month to 200,000 due to lack of demand.And that wasn’t the only cut Apple had tomake.This past April they cut the HomePod’s pricefrom $350 to $300.But according to recent reports, that stillwasn’t enough to bolster demand.So why isn’t Apple selling as many HomePodsas they expected?After all, it does have some incredible featuresthat the failed iPod Hi-Fi never did.Things like Siri, adaptive sound, stereo support,AirPlay, native Apple Music support, a microphonearray, and a more compact design.So what’s preventing customers from makingthe purchase?Well, the answer becomes clear when you takea look at what the Amazon Echo and GoogleHome have to offer.For just $100, the Echo offers what some arecalling “amazing sound” in addition toan extensive list of smart speaker features.Not only does it natively support the freeand paid versions of Amazon Music, but theEcho also works with Prime Music, Pandora,TuneIn, iHeart, Spotify, and Sirius XM.The HomePod only natively supports Apple Music.If you want it to play music from any otherservice, you’ll have to use Airplay froman Apple device.You can also use more voice commands withthe Amazon Echo, including ordering itemsfrom Amazon.With the HomePod, you’re limited to whateverSiri is capable of doing.So there are clear compromises Apple is makingwith the HomePod by emphasizing sound qualityabove all else.And while this may be a good approach foraudiophiles, the vast majority of customersare more than satisfied with a smart speakerthat sounds good enough, and costs a thirdof the price.And if you take a look at the HomePod’swebsite, you’ll notice that Apple doesn’tput a heavy emphasis on Siri in its marketing.The voice assistant is actually the last featurelisted.And this approach may sound familiar, sinceit’s one they took with the AirPods.Which has Siri integration, but are firstand foremost wireless headphones.And Apple actually suggests this connectionbetween the two products by using the same“pod” suffix in their names.And I think that’s important to recognize,because if Apple anticipated demand for theHomePod would be even half of what it wasfor the AirPods, it makes sense that theywere preparing to sell half a million unitsper month.But we know Apple wasn’t even close to reachingthose targets and the reason comes down tothe approach they took with the HomePod.You see, there are two ways of thinking abouta smart speaker.The first way is thinking of it as a personalassistant like the Amazon Echo.A product that helps you buy things from Amazon,create reminds, set timers, or answer trivialquestions just by using your voice.There’s not a focus on high fidelity audio.But the second way of thinking about a smartspeaker is completely different, which isthe direction Apple took with the HomePod.It does include some of the personal assistantcapabilities of the Amazon Echo, it doesn’tfocus on those features.Instead, Apple positioned the product as ahigh fidelity speaker system.Just like they positioned the AirPods as highquality wireless headphones.And so it really isn’t fair to compare theGoogle Home or Amazon to the HomePod, sinceit’s a fundamentally different product.The problem is it’s still technically asmart speaker and included in the same market.Now even though the HomePod is failing tomeet Apple’s sales forecasts, that doesn’tnecessarily mean it is a failed product.Apple doesn’t release unit sales numbersanymore but it’s estimated that they sold2-2.5 million HomePods in its first twelvemonths on the market.And that is comparable to the 2.4 millionAmazon Echo units that were sold in its firstyear.The only problem is Amazon almost tripledthose number in the products second year,which the HomePod shows no signs of doing.It’s also worth noting that while the HomePodonly has about 8-9 percent of the smart speakermarket, it’s a $300 product competing withnot only $100 speakers like the Amazon Echoand Google Home, but also $50 speakers likethe Echo Dot and Google Home mini.And many believe Apple recognizes the HomePod’spricing issue and it’s why theres rumorsof a stripped down, lower-cost model in theworks.But what’s fascinating to me about all thisis how similar the HomePod’s story is playingout compared to the iPod Hi-Fi over a decadebefore.Because the Hi-Fi also failed to meet Apple’ssales forecast, it also captured about 7%of the iPod speaker market, it was also competingagainst lower cost rivals which compromisedon sound quality, and rumors also surfacedof Apple making a stripped-down model at alower price point.So in my mind, it’s worth asking if theHomePod’s story will end the same way asthe Hi-Fi, will it be discontinued sometimethis year?Well, it’s hard to say, but I highly doubtit, and here’s why.With the iPod Hi-Fi, it was clear Apple wasn’tmaking any improvements or investing any moretime into the product shortly before it wasdiscontinued.But when it comes to the HomePod, the storychanges quite a bit.Apple is continuing to roll out the HomePodinternationally with its most recent releasein Japan on August 23rd.And I don’t think that’s something Applewould bother doing if they were taking itoff the market in the coming months.Also, new software features are being rolledout to the HomePod this fall with iOS 13.You’ll actually be able to handoff musicyou’re playing from your phone to the HomePodby simply holding your device near the speaker.And again, that demonstrates resources beinginvested in the product which didn’t happenwith the iPod Hi-Fi.So while the HomePod may very well be a failureat this point in time, I don’t think it’llsee the same fate as the iPod Hi-Fi.Because although it isn’t selling as wellas Apple had hoped, it’s still generatingquite a bit of revenue for the company andfurther entrenching users in services likeApple Music.And with new software features coming to theHomePod it’s pretty clear that Apple isn’tgiving up on the product just yet.And I think we may be seeing a new lower-costmodel in the near future which could reallyboost Apple’s position in the smart speakermarket.Now let’s talk about a product that hasbeen a wild success, and that’s the Series4 Apple Watch, which gives you the abilityto take ECG readings right from your wrist.And now thank’s to the technology developedat RocketBody, that ECG-reading can be usedto turn your Apple Watch and iPhone into apersonal fitness trainer.The Rocketbody app provides precise readingsof your body condition during a training sessionand throughout the day, determining your readinessfor the next workout.But my favorite feature of the app is itsability to completely personalize my training.Customized workouts are generated based onmy physical condition, taken through the ECGimmediately before the workout starts.This ensures my time at the gym is used efficientlyto achieve my fitness goals as soon as possible.So if you do any sort of exercise I highlyrecommend trying this app out, which you cando for free with a 14-day trial.The link for that is in the description.And be sure to leave a review on Product Huntto let the developers know what you thinkof the app.Alright guys thanks for watching and I’llsee you next time.\n"