HomePod: An Uphill Battle Worth Fighting

Daniel Martins

Apple has been eating dust in the smart speaker market.

Since the company launched its HomePod in 2018, the product has failed to gain traction. According to data from Statista, Apple has never shipped many more than 5% of all smart speakers sold in any given quarter.

In April 2019, barely a year after the device’s launch, Apple reduced the regular price by almost 15% to $300. The rare discount moved the needle, but not by much. Apple’s market share of quarterly smart speaker shipments increased from a pitiful 4.1% in the 2018 holiday quarter to 4.7% six months later. Today, HomePods account for only 2.8% of active smart speaker devices (see chart below).

US smart speaker market share by brand, 2018-2020
Smart speaker market share, 2018-2020VoiceBot Research

The iPhone of smart speakers

It looks to me like Apple’s approach to the smart speaker market has been aligned with its brand and value proposition. Rather than competing with the Amazon Echo at the sub-$100 category, Apple has turned the focus of attention to music and sound quality.

In a sense, the HomePod is the iPhone of smart speakers. The device is certainly not cheap. But at less than a foot tall, it is loaded with high-end features, including a design subwoofer and seven tweeters. Cnet has ranked the HomePod best in the market for overall sound.

A page from Amazon’s book

Now, let’s do some math. According to Canalys, about 125 million smart speakers were sold in 2019. If Apple managed to capture a 5% market share as suggested by Statista, at $300 per unit, total revenues would have approached $2 billion.

This number would have represented a respectable 7.5% of the company’s wearables, home and accessories segment sales in 2019. Were HomePods an independent company, it would have featured at the bottom of the Fortune 1,000 list. Not too shabby.

However, Amazon has taught us that the real value of a smart speaker lies in the access that it provides to the company’s other products and services. As a stand-alone product, Amazon’s $50 Echo Dot has probably been a loss leader. But through it, users can place orders on Amazon.com by voice command. Amazon even offers services designed for the Echo, including a speaker-only version of Amazon Music Unlimited for $4 per month.

A battle worth fighting

The HomePod has not been much of a success since its 2018 launch. However, I believe Apple would be well served by fighting a fierce battle with its top competitors for more space in the market.

HomePod could be the gateway to more Apple products and services sold, starting with Apple Music. VoiceBot Research estimates that streaming music service is the number one application of smart speakers. And even though only one-fourth of users have ever made a purchase online through their devices, this application could grow fast over time.

For this reason, I will keep an eye on the evolution of the HomePod, hoping for more market dominance. I believe that the rumored launch of a low-cost version, for example, would be a step in the right direction.

Note: this article contains affiliate links. Thanks for supporting The Apple Maven.

Comments (2)
No. 1-1
Lee Van Cleef
Lee Van Cleef

I think that what prevents the HomePod from growing and becoming a big competitor for Amazon is that it's tied in the iOs ecosystem

Other Products