Apple – Battle for the smart home pt. VI

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HomePod delays have cost it dearly.

• The HomePod has only one advantage in a market that is rapidly becoming all about the algorithms with hardware being left to those that really know audio.
• The much awaited HomePod is now available for pre-order and will start shipping on February 9^th
• At $399, it is going up against some of the very best that the audio industry has to offer.
• In 2017 the best digital assistants were only available in their own in-house hardware but this is changing rapidly as there is a plethora of third party products coming to market.
• Furthermore, Amazon Alexa, Baidu DuerOS and Google Assistant all have substantial advantages over Siri, which in my opinion, make them much better smart assistants to have in one’s house.
• Hence, I see the HomePod competing on two fronts and on the most important front, I see it being hopelessly outclassed.
• These are:
  • Audio: There is no doubt that Apple can make excellent quality audio products.
  • However, in this category, it is not alone.
  • While I think it can comfortably hold its own in the mid to high end of the speaker market, I have doubts whether it can do so at 40% gross margins.
  • This is because competing solely on audio quality, there will be just as good audio products available at lower prices.
  • Digital Assistant. It is here that I think that Siri is hopelessly outclassed.
  • My tests have consistently shown that both Google Assistant and Duer OS are much better products in their relevant markets. (Baidu DuerOS does not yet exist in English).
  • Furthermore, when it comes to the smart home, Apple is hopelessly outclassed when it is compared to both Amazon Alexa and now, Google Home.
  • The star of CES was Google Assistant and not just because Google bought almost every piece of advertising space that there was available.
  • This was followed through on the show floor with almost every smart device manufacturer either already supporting Google Assistant or having it on the immediate roadmap.
  • Just like 2017, Apple HomeKit was a no show and I saw just one product (a smart ceiling fan) that had support for Apple’s smart home offering.
• Consequently, I think that Siri is way behind in the smart home leaving Apple competing pretty much on audio quality alone.
• The real competitors for HomePod are the likes of Sonos, Sony, Harman Kardon and so on, all of whom are likely to make their product available with either (or both) Google Assistant or Amazon Alexa.
• This is why I see competition in this space moving away from audio quality and rapidly becoming all about the algorithms.
• This combined with Google closing the gap in the smart home, is what has lead me to reverse my position and to expect that it will be Google that ends up triumphant in this space (see here).
• Hence, from Apple perspective it appears that there will be equivalent sounding products with much better brains on the market at lower prices.
• I think only a small sliver the hardcore Apple fanbase is going to buy this product which is not enough to make it a real success in my opinion.