Ahead of launch, there were some indications that Apple's (NASDAQ:AAPL) HomePod could garner strong demand, such as preorders for launch day inventory selling out before the device was released. What's less clear is how much inventory Apple had built for the launch, or how many units the Mac maker ended up selling. Apple's first smart speaker commands a hefty $350 price tag, which could potentially hurt demand. HomePod launched exactly a month ago.

One Street analyst is now weighing in and believes HomePod is off to a slow start.

HomePod on a shelf

Image source: Apple.

HomePod sales are "underwhelming" 

Barclays analyst Blayne Curtis has distributed a research note (via MacRumors and AppleInsider) after conducting supply checks and other supply chain research. AirPods continue to sell well, and Curtis expects Apple to keep ramping production in order to meet this demand. AirPods have been supply constrained since the holiday shopping season. The analyst is modeling for 30 million units for 2018, making AirPods one of Apple's most successful audio accessories. The company is reportedly working on new high-end headphones to complement AirPods.

In contrast, Curtis believes that HomePod sales have been "underwhelming" to date, although the analyst does not offer any specific estimates for how many smart speakers Apple may have sold by now. Curtis estimates that the initial production run was for 6 million to 7 million units. Unlike AirPods, which are seeing shipping delays from Apple's online store, HomePod is readily available.

Why isn't HomePod selling well?

There are several factors that are likely limiting HomePod demand. For starters, initial reviews weren't all that great, with nearly all reviewers agreeing that Siri is inferior to other voice-controlled virtual assistants on the market. Beyond that, the $350 price tag puts HomePod at the high end of the market, far more expensive than competing smart speakers from Amazon.com or Alphabet subsidiary Google. The search giant does offer an even more expensive Home Max at $400, but also offers an entry-level Home Mini for just $50.

Apple is also uninterested in addressing the entire market, instead choosing to focus on its own user base, a characteristic move for the Mac maker. HomePod only supports Apple Music and iOS devices. The device cannot be used like other Bluetooth speakers, and doesn't work with Android phones. That strategy fundamentally limits its addressable market, as music consumers that use Spotify instead of Apple Music can't use HomePod very well, and Spotify has about twice as many paid subscribers. (You can technically AirPlay from Spotify to HomePod but that defeats the purpose of having a voice-controlled smart speaker.)

The good news is that Apple is reportedly working on a smaller, more affordable version of the HomePod, which could end up being priced between $150 and $200. Such a device would better address mainstream consumers, even within just Apple's user base.

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.