Apple HomePod Faces Tough Odds Against Amazon Echo in Connected Home Market
Four months before its anticipated launch, some experts have already discounted Apple HomePod’s prospects for success.
HomePod, due in December, is Apple’s belated entry into the connected speaker market and a challenger to Amazon’s leader in the space, the Echo. These devices, which understand human commands, can be used to order food, play music, and look up information on Wikipedia.
Connected speakers are part of a broader white-hot market for connected home devices, which Amazon, and Google hope to control against rival devices planned by number of others like Apple and Microsoft. All of these companies want consumers to use their respective technology to control connected gadgets, from smart lights and thermostats to audio-video gear.
Amazon (AMZN) Echo has been broadly available for three years, while Google Home became broadly available last year. The big question is whether Amazon has locked up so much of the market that it’s now too late for Apple to gain a significant foothold.
Consumer Intelligence Research Partners, a Chicago-based research firm, seems to think that Amazon’s early dominance hampers Apple’s chances. CIRP estimates that Amazon has sold 15 million Echos, accounting for 75% of the U.S. market, while Google has sold an estimated 5 million Homes, or 24%.
Neither Amazon nor Google discloses sales numbers.
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Most households will need just one “operating system,” and currently, Amazon Alexa—the voice assistant behind the Echo— is it, according to CIRP. Others are also skeptical about Apple’s chances with HomePod and its Siri voice assistant. A survey of 2,200 consumers just after Apple’s HomePod announcement in June, found that 55% of those surveyed had no interest in buying the device.
But some analysts and tech watchers say it’s too soon to count HomePod out. For one thing, a three-year-old market is still very young. While sales of 15 million Amazon Echo units is a big number, as of last year there were about 125 million U.S. households. Second, Apple has long been able to depend on hardcore fans to buy its premium-priced products.
Don Reisinger, who covers devices for Fortune, said it’s difficult to gauge what HomePod will end up being able to do based merely on the quick peek Apple gave in June. Apple is notoriously tight-lipped about product features. The company also has a strong developer ecosystem that can do a lot to enhance the HomePod experience.
Integrating HomePod with Apple TV, which streams video over the web to a TV or other screen, could be a win. That would enable Apple TV users to control their viewing with voice commands instead of the remote, which some find annoying. And, there are many households where Apple is the preferred brand of laptop, tablet, and smartphone. Those consumers could be an easy sale for HomePod.
While Gartner (IT) analyst Werner Goertz agrees that Amazon Echo’s market share will make it harder for newer rivals to enter the arena, he agrees that there’s a base of Apple fans who will buy the device. Historically, Apple aficionados are eager to pay a premium for whatever the company builds, and HomePod will command a premium price of $349—nearly double the cost of Amazon Echo or Google Home.
But there are unknowns here too. It’s difficult to see how Apple can convert non-fanboys to HomePod. Many will likely consider Amazon Echo to be good enough. Apple also has to make absolutely sure that Siri, which has been included in Apple iPhones for years, performs well in a home setting.
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The HomePod speaker will be heavier than Echo or Google Home, and Kevin Tofel, a gadget enthusiast and blogger, said that means it will offer much better sound. “I’m basing that simply off of physics: The heavier the magnets (and amps) in a speaker, the richer and more powerful the sound” Tofel he told Fortune via email. Tofel co-hosted a podcast on this topic recently.
At its Worldwide Developers Conference in June, Apple did emphasize the HomePod’s sound quality as a selling point.
The possibly bad news for HomePod is that an array of consumer electronics companies including Panasonic, JBL, and Onkyo, plan higher end speakers that will work with Alexa and Google Home. Those products may make Alexa or Google Home more palatable to the audiophiles among us and thus become more direct competitors to HomePod.