Apple (AAPL +0.00%) unveiled its long-rumored entry into the smart assistant speaker market on Monday. When it hits the market in December, HomePod will give Apple a high-end competitor to Amazon.com's (AMZN +2.05%) Echo and Alphabet's (GOOG 0.21%) (GOOGL 0.39%) Google Home.
There's going to be plenty of buzz for Apple's shiny new plaything, but let's not assume that it's going to be the class act of Cupertino's next needle-moving innovation. Amazon and Alphabet aren't just going to buckle and bow out now just because Apple is here. Let's go over a few of the reasons why the HomePod may not be the game changer that Apple investors need.
Image source: Apple.
1. HomePod is too expensive
Priced at $349, Apple's first voice-activated digital assistant will cost nearly twice as much as Amazon's Echo and almost three times as much as Google Home. In terms of functionality, outside of the high-end speaker housed inside Apple's new toy, you can buy seven Echo Dot devices for the same price as a single HomePod.
No one was expecting Apple to price its hardware aggressively. Amazon and Alphabet don't have a problem selling near or in some cases below cost. Consumer gadgets are Trojan horses for grander purposes. Apple doesn't sell hardware unless it can turn a profit on the actual device.
HomePod's hardware specs make it a superior speaker, but if that's the end goal, why won't folks just pair a Sonos with an Echo Dot?
2. Six months is a lifetime when it comes to innovation
Apple's HomePod won't be available until six months from now, and let's not even begin to speculate about what December availability may mean in terms of missing on the early stages of the critical holiday shopping season if Apple doesn't have this out on the market by late November. Amazon and Alphabet have six months to raise the bar or lower prices -- or both.
Apple isn't going to budge from its $349 price later this year, but it's a safe bet that Amazon and Alphabet will be aggressive around Black Friday. Amazon also keeps putting out new products. It recently showed off Echo Look , a $199 Alexa-based device with a camera that can provide fashion assistance. The real winner could be Echo Show, a $229 model that comes with a seven-inch touchscreen. Echo Show will also make video calls, because Amazon can afford to stiff telcos after its smartphone flop. Amazon's even offering a $100 discount if you order a pair of Echo Show devices, which, if you work the math, comes out to exactly the same price as a single HomePod.
The HomePod only seems like a marginally out-of-touch product now. Just wait for what the marketplace looks like six months from now.
3. HomePod might not move the needle at Apple
Apple still lives and dies by the iPhone. There's a steady base of die-hard fans who trade in their smartphones every year or two. This won't happen with a smart speaker. If Apple gives you a reason to upgrade every year -- the way it did with Apple Watch last year -- it will lose the faith of early adopters. Even folks buying new iPhones every year aren't going to want to shell out $349 every year for a product that should be a long-term investment.
Apple's greed may also be a limiting factor. As great as the HomePod speaker may be, it's limited in initial functionality. The only streaming music platform that it's officially supporting is Apple Music. Amazon Echo and Google Home support all of the leading streaming apps, presumably an important feature when you're setting your product apart based on speaker quality.
