Friday, April 13, 2018

Ming-Chi Kuo Says Apple Considering Lower-Priced HomePod After Potentially Lackluster Sales

HomePod shipments “could be far below market expectations” this year, according to reputable KGI Securities analyst Ming-Chi Kuo.

“Our understanding is that the market expects HomePod shipments to arrive at 5-10 million units in the 2018 fiscal year, versus our forecast of only 2.0-2.5 million units,” wrote Kuo, in a research note obtained by MacRumors.

Kuo believes the “major miss” in HomePod shipments could be attributable to the speaker’s design and pricing, among other factors.

For starters, at $349, he said the HomePod’s high price “could undermine demand despite excellent sound quality.” He added that Siri provides an “uninspiring user experience” compared to competitors, presumably including the Amazon Echo with Alexa and the Google Home with Google Assistant.

Kuo said the HomePod’s potentially lackluster sales also highlights “underlying concerns” in Apple’s development of artificial intelligence.

It’s been six years since Apple introduced Siri to the market, which was way ahead of the firm’s major competitors. The massive population of iOS and macOS users is also conducive to the promotion of the voice assistant function. However, we note that for most users worldwide, Siri is not a must-have function, and Apple has not yet become a leading brand in the AI voice assistant market. We also note that HomePod has not added support for new languages in the device since launch, suggesting Apple is facing challenges in AI/voice assistant development spanning the globe; this will cap the shipments momentum of HomePod.

The oft-accurate analyst said Apple is “mulling” a “low-cost version” of the HomePod that may help short-term shipments. However, even if the product materializes, he predicts it will only provide a short-term boost to sales.

More importantly, Kuo believes Apple needs to improve Siri, support more languages, and make other improvements to the HomePod to stay competitive against Amazon and Google in the smart speaker market. Premium audio quality alone may not be enough for customers to justify dropping $349 on the speaker.

Kuo’s research on potentially lower-than-expected HomePod shipments echoes similar reports from Bloomberg News and the China Times earlier this week. Rumors about a lower-priced HomePod have also surfaced a few times in recent months, with one report suggesting a $150-$200 price in the United States.

Apple released the HomePod in early February in the United States, United Kingdom, and Australia, and it also confirmed availability in France and Germany later this spring. AirPlay 2 features such as stereo sound and multi-room audio won’t be available until later this year, according to Apple.

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