To a degree, you’re partially correct. I don’t suspect discontinuing the larger HomePod was a mistake, because Apple was extremely late into the ‘smart speaker’ segment, when this had been a trend for years and there wasn’t much traction for them that they were gaining with one larger unit. If anything, by discontinuing the larger variant of the HomePod, introducing a smaller, more affordable version was the correct move that put the HomePod in a more appropriate segment against the Sonos, beats, Amazon, ect.
Where are you are correct, was that the pricing of the HomePod was on the higher end, and consumers are likely thinking to themselves, ‘Why would I want to pay this price, when there’s so many cheaper options that probably meet simple expectations with voice commands, adequate sound….’ What people didn’t understand, was the HomePod was so much more than a smart speaker, it was an actual music player first that really boasted the dynamics of sound quality, unfortunately that wasn’t really captured appropriately by consumers who just couldn’t look past the price point.