Signs that Apple’s HomePod smart speaker has been less than a blockbuster are increasing–and the market for lower-priced smart speakers is expanding.
It’s gotten pretty easy to buy a HomePod for well under the official $349 retail price. B&H Photo is selling it for $250, a hundred-buck discount. So is Target, although its website says the device is currently out of stock. Best Buy has HomePods for $280.
It’s not just third-party retailers. Apple itself has been sending promo codes out to Apple Music subscribers in the U.K., offering a roughly 20% discount on a HomePod.
If the HomePod were selling like, well, Amazon Echos, you probably wouldn’t be seeing these price cuts. Then again, the Echo versions that are selling the best are the ones that are less than $100, making them impulse items in a way that the HomePod is not.
And Apple appears to be hedging its bets on the HomePod. Last month, the company announced that it would make Apple Music available on Amazon Echo devices. Its motivation for doing that isn’t completely clear, but the result is that the HomePod is no longer the only speaker that supports Apple Music directly. Apple clearly decided that Apple Music user growth is more important to it than HomePod sales.
Meanwhile, the overall smart speaker market–including Echo, Google Home, and other contenders–is growing nicely. During the 12 months ending September 2018, unit sales of voice-enabled speakers rose 36% compared to the same time frame a year ago, according to The NPD Group. Revenue from smart speaker sales grew 15% year over year to $2.7 billion in the U.S.
But most of the smart speakers sold cost far less than the HomePod. Sub-$100 speakers accounted for 76% of unit sales reported by NPD, and about 44% of revenue sales. Smart speakers with prices between $200 and $400 made up only 5% of unit sales.
The flood of low-priced speakers is driven by platform companies’ overarching desire to advance the use of the AI personal assistants that they carry. Amazon is willing to sell a $50 smart speaker–and perhaps make little profit–because it wants Alexa to gain a foothold in the household. The same goes for Google, which cut the price of its Google Home speaker from $129 to $99. It also dropped the price of the Google Home Mini from $49 to $29.
Over time, smart speakers could help bootstrap entire ecosystems. “With speakers being the gateway into the Smart Home, growing the installed base to drive consumer recognition of the value of these devices will allow adjacent categories to flourish as well, such as locks, light bulbs, smart displays, and mesh Wi-Fi systems,” said The NPD Group VP Stephen Baker in a statement.
For now, consumers may like the idea of investing smaller amounts of money in the speakers, because for many they’ve proved to be merely two- or three-trick ponies–music, news, and alarms.