Apple’s HomePod Has Trouble Finding a Home

April 19, 2018 - 5 minutes read

IoT app developer

Apple’s entry into the smart speaker market wasn’t as stellar as the company had hoped. With low sales and inventory piling up at Apple store locations across the country, the tech giant has cut down on manufacturing orders for the HomePod.

What happened? And does this mark the end of Apple’s foray into the Internet of Things (IoT) for the home?

Great Expectations

Although the smart speaker market was dominated by Amazon’s Alexa, Apple wasn’t worried about competing with the Seattle-based developer and e-commerce giant when it released the HomePod in January. At $349, the HomePod’s price tag was quite steeper than the devices comprising the Amazon Echo lineup.

But that didn’t stop the device from making a strong first impression — according to commerce data firm Slice Intelligence, the HomePod not only had respectable pre-order figures, but it comprised roughly a third of U.S. smart speaker unit sales at the end of January. During the first pre-order weekend, this translated to Apple taking 72 percent of revenue in the smart speaker market.

But by the time the HomePod actually arrived on store shelves in February and March, the exact opposite was occurring: Apple’s revenue share dropped to 19 percent while Amazon bounced back to a majority 68 percent. How did the HomePod’s market performance flip-flop so quickly?

A Disconnect Between Apple and the Consumer

The first stumble that Apple made in its release of the HomePod was missing its original December release date. This past holiday shopping season was the biggest one yet for smart speakers and Home IoT products. Apple didn’t do itself any favors by missing out on this holiday hype.

But this reason alone isn’t enough to explain the HomePod’s dismal performance. The holidays have long passed, and many Apple store locations are still selling less than 10 HomePods a day. The real problem with the HomePod lies in how Apple viewed its product compared to how consumers saw it.

Consumers expected the HomePod to be capable of accomplishing many of the feats that its competitors do. Both Google Home and Amazon’s Echo can order you pizza, answer questions, keep a running grocery list, and many other errands. Apple’s HomePod is mostly relegated to playing Apple Music tunes, sending messages through your iPhone, and controlling a few smart home appliances. For many consumers, the HomePod’s lack of ability made the extra $200 it costs compared to other smart speakers feel unjustifiable.

While consumers thought the HomePod would offer an array of capabilities, it would seem that Apple never viewed it as anything more than a high-quality speaker. Apple had a unique opportunity to redefine its smart home ecosystem; instead of the iPhone being at the center of it, the new HomePod was a much more natural fit. But now that the HomePod is out, and it’s heavily dependent on the iPhone, it’s clear that Apple viewed it as more of an accessory.

Down But Not Out

Apple has had its IoT developers and engineers toiling away on the HomePod for at least four years. So while it may have recently lowered its own sales forecasts of the product and even cut down on orders from its manufacturers, that doesn’t necessarily mean the HomePod is out of the smart home race.

Forecasters expect Apple’s HomePod to pick up in sales during the next holiday shopping season. Apple has dealt with similar products in its past before. The Apple Watch wasn’t exactly a hit right away, but now it’s a dominant player in the smartwatch market.

Just as it revamped the Apple Watch interface after its initial release, Apple could pull a similar move with the HomePod. Recently, the iPhone creator just poached Google’s AI chief, so it wouldn’t be out of the question for the HomePod (and Siri) to experience a serious intelligence increase in the near future.

Of course, Google and Amazon aren’t ones to let the competition pass them up so simply. While Apple goes back to the drawing board, they’ll surely be making upgrades to their smart speaker devices as well. Who will be the top player in the market in a year is anyone’s guess, but it wouldn’t be wise to count Apple out just yet.

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