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Apple's HomePod Is Dead

By Evan Niu, CFA - Mar 17, 2021 at 8:30AM

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Long live the HomePod Mini.

After struggling for years to gain meaningful traction in the booming smart speaker market, Apple has officially decided to throw in the towel with the original HomePod. Launched in early 2018 at a lofty $350 price point, the HomePod never commanded strong sales for a variety of reasons.

In addition to being priced at a massive premium compared to popular devices from Amazon.com and Alphabet (GOOG 1.66%) (GOOGL 1.77%) subsidiary Google, Apple's virtual assistant Siri is widely considered to be inferior, and the Mac maker has long resisted supporting third-party music-streaming services like Spotify, the most popular music-streaming service on the planet. (Apple is working to add support for other services, likely in part due to antitrust criticisms.)

A man and two children in a kitchen, with a HomePod Mini on the counter

The HomePod Mini is selling much better than its larger sibling. Image source: Apple.

It's all about HomePod Mini now

Apple's market share in the smart speaker market languished, reaching a mere 4.7% by the end of 2019, according to Strategy Analytics. The more affordable HomePod Mini that was released last year at the $99 price point is far more competitive with Amazon's Echo and Google's Nest Audio.

The HomePod Mini helped bolster Apple's position, as the Cupertino tech giant's share was able to hit a new high of 7.8% in the fourth quarter of 2020, according to Strategy Analytics. Global smart speaker sales hit record levels of over 150 million units last year, despite the challenging macroeconomic environment related to the COVID-19 pandemic.

As one might expect, Amazon and Google maintained their dominant positions in the smart speaker and smart display market, as those tech companies have been continuously expanding their product portfolios. Both companies refreshed their lineups last fall.

Company

Q4 2020 Units

Q4 2020 Market Share

Amazon (AMZN 4.11%)

16.5 million

28.3%

Google

13.2 million

22.6%

Baidu

6.6 million

11.3%

Alibaba

6.3 million

10.8%

Apple (AAPL 2.54%)

4.6 million

7.8%

Xiaomi

3.8 million

6.5%

Others

7.3 million

12.6%

Total

58.2 million

100%

Data source: Strategy Analytics.

"HomePod mini has been a hit since its debut last fall, offering customers amazing sound, an intelligent assistant, and smart home control all for just $99," Apple said in a statement provided to various media outlets. "We are focusing our efforts on HomePod mini."

It's about time that Apple killed off the beleaguered HomePod. Even the price cut to $300 in 2019 failed to stimulate sales, as the company's emphasis on high-fidelity audio only appealed to a niche audiophile segment of the market. Most average consumers would prefer a more affordable product, and the HomePod Mini is far better positioned to address the mainstream.

The smaller speaker is already off to a strong start. Can Apple maintain the momentum?

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