In a somewhat puzzling move, streaming TV platform Roku (NASDAQ:ROKU) launched wireless speakers in 2018 as its first foray into the speaker market. The entry was peculiar because Roku has been slowly moving away from first-party hardware for its core tech platform, relying increasingly on third-party Roku TVs for user acquisition. Regardless, the company is expanding its home audio offerings with a pair of new products announced this morning.
Here's what investors need to know.
Two new low-cost audio products
Roku is introducing a Smart Soundbar and Wireless Subwoofer, each of which costs $180. The sound bar will include four drivers and automatic volume leveling in order to deliver uniform audio levels. The device doubles as a streaming player as well, supporting streaming up to 4K. Virtual assistants like Google Assistant and Amazon (NASDAQ:AMZN) Alexa are supported.
The subwoofer has a 10-inch driver and will offer more powerful bass performance and integrate with the aforementioned wireless speakers from last year. The devices can now be pre-ordered and are expected to hit retail stores in October.
A noisy market
Roku is expanding into a crowded market but following the same strategy of offering low-cost hardware likely sold with little to no gross profit. Competing sound bars from established rivals such as Bose or Sonos can be priced as high as $800, although both companies offer more affordable models.
Speaking of Amazon, the e-commerce giant is also expected to announce a slew of new Fire TV devices at IFA 2019, according to a TechCrunch article that has since been deleted, possibly because it was published prematurely. IFA is one of the biggest consumer tech trade shows in Europe. Many of the new gadgets license Amazon's Fire TV platform and are made by third-party manufacturers.
Included in the mix is a new Nebula Soundbar made by Anker that similarly doubles as a streaming player for Fire TV and supports 4K resolution. That gadget will be priced at $230 in the U.S. and ship in November, according to the report.
Still top dog in the U.S.
Roku is the No. 1 streaming platform in the U.S., with market researcher Strategy Analytics recently estimating that the company has over 41 million devices in use in the States. Roku grabbed 30% of connected TV device sales in the first quarter, with Amazon coming in No. 2 with 12%. However, Amazon boasts more users globally, with the company saying it now has over 37 million monthly active users. At the end of the second quarter, Roku had 30.5 million active accounts.
Including streaming capabilities makes more sense than audio-only products, as the new Smart Soundbar will run Roku OS and actually contribute to growing the streaming TV platform.