Apple's (AAPL) Reported Plans to Challenge Amazon (AMZN) Make Sense, But Won't Move the Needle Much - TheStreet

With Amazon's (AMZN) - Get ReportEcho speaker/voice assistant line having gradually become a hit, and Alphabet's (GOOGL) - Get ReportGoogle on the verge of launching a rival device, it looks as if Apple (AAPL) - Get Report has decided it, too, needs to offer a speaker/voice assistant device for homes.

Apple's reported plans are quite understandable, and the company might have a few ways to make its device stand out, particularly to iPhone/iPad users. But given the competition and the relatively modest size of the addressable market, the product is unlikely to have a big financial impact on the world's most profitable company.

Bloomberg reported on Friday Apple is prepping "an Echo-like smart-home device based on the Siri voice assistant." It adds the device has reached the prototype testing phase, but cautions Apple's plans aren't finalized and the project could still be scrapped.

The Information had already reported in May an Echo-like device is being prepped. But VentureBeat reported a few days later Apple's home assistant would be built into a new Apple TV set-top, rather than work as a standalone device. It looks as if The Information's report was closer to the mark.

Bloomberg's scoop comes just nine days after Amazon unveiled a new version of its hockey puck-shaped Echo Dot device that goes for just $50 -- $40 less than the original Dot, and $130 less than what the original Echo sells for -- and features a better speech processor.

It also comes ahead of an Oct. 4 Google event at which the company is expected (among other things) to share a launch date and pricing for its Google Home speaker/assistant, which was first unveiled at its May I/O conference. Android Police reports Home, which (along with Android 7.0) supports a new Google Assistant service, will sell for $129.

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So how will Apple's solution stand out? For starters, Bloomberg's sources state the product will feature "more advanced microphone and speaker technology." They add Apple might use technology obtained through its acquisitions of face-recognition startups Faceshift and Emotient to allow its device to "act based on who is in a room or a person's emotional state."

The fact the product will leverage Siri could also let it take advantage of Apple's iOS and MacOS user data -- whether obtained via Siri or other means -- to deliver personalized responses and reminders, as well as stay aware of a user's daily activity. And one has to assume it will support Apple's HomeKit home automation platform, which allows iOS devices and the Apple Watch to control many smart home products.

At the same time, the Alexa assistant powering Amazon's Echo line has already created a pretty big ecosystem of supported home devices and web/mobile services. Amazon disclosed last week the number of "skills" supported by Alexa has topped 3,000, up three times from June levels.

Google, like Apple, hasn't made as much progress as Amazon in creating an ecosystem for its assistant service. But its artificial intelligence and natural language-processing strengths could help Google Home stand out, as might the user data it takes in via offerings such as Google search, Android, Gmail and Maps.

Meanwhile, Apple will be facing off against Amazon and Google in what's still a fairly small market. In June, The Information reported Amazon is looking to sell 3 million Echo units in 2016, and up to 10 million in 2017. For comparison, Apple sold 231.5 million iPhones last year at an average selling price (ASP) that -- given Echo devices are priced between $50 and $180 -- was likely more than four times higher than Amazon's current Echo ASP.

Thus, even if Apple sells as many home speakers next year as Amazon is reportedly hoping to sell, the product's revenue will be equal to a tiny fraction of Apple's iPhone revenue. Both literally and figuratively, an Apple-made Echo rival will be peripheral to the company's biggest profit engine.