Following a delay last year, Apple (NASDAQ:AAPL) will launch its HomePod on Friday. The $350 smart speaker represents the Mac maker's first foray into the growing smart speaker market, which is poised to get even bigger in 2018. Ahead of the launch, reviews have started to hit the internet. They're mostly confirming what some have been expecting all along: HomePod has incredible audio quality, but Siri simply can't compete with other virtual assistants.
Can HomePod make a dent in the smart speaker market?
Audio quality is great, but that's about it
The Verge notes that the audio engineering that went into HomePod is downright impressive, creating three virtual sound beams that the device uses for ambient and direct sounds. The resulting audio quality is indeed superior to just about every other competing smart speaker, which TechCrunch agrees with. The reviews from BuzzFeed and CNET are also worth checking out, and mostly come away with the same conclusions.
Unfortunately, most average consumers are unlikely to be able to discern the incremental difference, particularly after factoring in the premium price tag. Sonos now sells two units of its new Sonos One for the same $350, and offers audio quality that is nearly as good. Amazon.com's new flagship Echo costs just $100, although Alphabet subsidiary Google is selling its Google Home Max at an even higher price point of $400.
This marks the second time that Apple has bet big on high-fidelity audio. The company's last attempt, the iPod Hi-Fi, flopped badly, and it remains to be seen if HomePod can redeem Apple.
Limiting the market
Apple is expectedly limiting HomePod to only support Apple Music and iOS devices, as the company continues to aggressively grow its music-streaming service, which now has 36 million paid subscribers. Within the U.S., which is both the largest smart-speaker market and largest music-streaming market, Apple may even overtake Spotify as early as this summer, based on current trajectories.
But that effectively precludes large swaths of the market -- specifically, anyone with an Android phone or anyone that prefers Spotify as their music streaming service. These are standard moves out of Apple's playbook, but Apple is already facing an uphill battle against the competition. These strategic choices may ultimately end up hindering HomePod sales. Of course, Apple has a massive and loyal user base to sell HomePod into.
HomePod will presumably be included in Apple's "Other products" segment, which generated $14.3 billion in revenue last year and is currently being driven by Apple Watch. If Apple is hoping that HomePod will help it catch up in smart speakers and the smart home, it could be sorely mistaken.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends GOOG, GOOGL, AMZN, and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.