Given how Apple (AAPL -0.40%) quickly become a major player in the headphone business after it launched its first AirPods in late 2016, investors likely hoped the tech giant would be able to pull off a similar quick success when it entered the fast-growing smart speaker market in 2018. But the tech company's smart speaker products haven't been as well-received.
Fortunately, however, Apple finally seems to be gaining some meaningful traction in the market -- enough for investors to start thinking about how the product line could potentially morph into a meaningful growth driver for the company.
Market share gains
According to recently published data from market research firm Strategy Analytics, Apple has been snapping up lots of market share this year. While overall smart speaker and smart display market shipments grew an estimated 10% year over year in the third quarter of 2021, Apple's smart speaker shipments increased an estimated 92% year over year.
This growth in shipments helped Apple's share of quarterly shipments increase from 5.9% in the third quarter of 2020 to an estimated 10.2% in the third quarter of 2021.
The surge in sales in Apple's smart speakers, of course, was driven by the recent launch of its more affordable HomePod mini device. The speaker was released in late 2020, giving the company a low-priced smart speaker offering in the third calendar quarter of 2021 that it didn't have in the year-ago period.
While Apple doesn't break out shipments or revenue of its HomePod devices, it does report revenue for a segment that includes sales of wearable devices, smart speakers, and other accessories. This segment, called "wearables, home, and accessories," saw revenue of $8.8 billion in Apple's fiscal Q3 (the three-month period ending Sep. 25), up from $7.9 billion in the year-ago quarter. This segment accounted for nearly 11% of total sales during the period and was bigger than Apple's iPad segment.
The holiday quarter could be big for Apple, too
Apple's smart speaker sales could be big in Q4, too.
Capitalizing on the success of its HomePod mini, Apple started shipping the $99 device in three new colors (orange, yellow, and blue) in November.
Also potentially helping sales of Apple's smart speakers, the new product makes a great Christmas gift. While it's more expensive than a lot of competitors' smart speakers, it's a low price for an Apple product. In addition, the device comes with a six-month subscription to Apple Music, making the product a better deal than it seems on the surface.
While supply shortages this holiday season will likely weigh on HomePod sales to some extent, the white, orange, yellow, and space gray versions of the HomePod mini are all notably currently available on the company's website to ship before Christmas.
With a strong third quarter in the books for its smart speaker business and a likely robust Q4, Apple's smart speaker products could finally start gaining enough traction to morph into a powerful catalyst for the tech company.