Apple Inc. (Nasdaq: AAPL) investors are bracing for what could be a difficult first-quarter earnings report on May 1. But while most of the attention will be on iPhone shipments and guidance, analysts say Apple’s recently launched HomePod smart speaker could also prove to be a huge disappointment.
The Amazon.com ( AMZN) Echo smart speaker has been a big hit since it launched in 2014. This past holiday season, Amazon reported that the Echo Dot was the top-selling item on its platform.
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Unfortunately for Apple investors, the HomePod, which was released in February, has an uphill battle in gaining market share from well-established competitors Amazon and Alphabet ( GOOG, GOOGL). To make matters worse, the HomePod costs roughly $200 more than competing smart speakers, and the first-generation devices have limited capabilities.
According to Deutsche Bank analyst Sherri Scribner, Apple dropped the ball on the HomePod. “Poor reviews and a significant fall-off in demand post the launch suggest the company has missed the mark,” Scribner says.
She says tethering the HomePod to the iPhone is a major shortcoming.
“In addition, the company misstepped in overemphasizing music functionality at the expense of smart home interoperability, limiting music streaming services to Apple Music and charging too much for the device,” she says.
Deutsche Bank is anticipating Apple will sell about 5 million HomePods in 2018, a number that will have minimal impact on Apple’s overall sales and earnings.
Scribner’s take on the HomePod’s market reception is in line with a recent report from Slice Intelligence, which found that only three weeks after the HomePod’s launch date its share of smart speaker sales had dropped to just 4 percent.
Adding to the smart speaker’s woes, Loup Ventures recently found that the HomePod correctly answered only 52.3 percent of 782 queries, worse than Echo (64 percent correct), Google Home (81 percent correct) and the Microsoft Corp. ( MSFT) Cortana (57 percent correct).
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GBH Insights head of technology research Daniel Ives says the smart speaker market will be massive, but market share will not come easy for Apple.
“While the combination of Apple and Siri makes the company a legitimate competitor in this fertile market, given its unmatched and loyal installed base, we believe it will be an uphill climb for Apple to unseat Amazon from its perch as a clear leader in this market,” Ives said following the HomePod launch.
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Apple Inc. (AAPL) Stock Won’t Get Help From HomePod originally appeared on usnews.com
