So why not continue selling the current one and then release its successor like they do with pretty much every other product they sell? Why withdraw it and let potential customers of the more expensive variant buy a Mini instead?
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HomePod HomePod Discontinued... Discussion.
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The problem with the Homepod is that it has no clear mission. Is it:
1. primarily a homekit/Siri assistant?
2. driver of Apple Music subscriptions?
3. high cost and high quality audiophile streaming speaker?
#2 and #3 are in direct conflict since the high cost deters many so it won't drive many subscriptions. The main reason for Apple music's market share is the iPhone and not the Homepod which is a rounding error in comparison.
#1 conflicts with #3 due to price as well.
If #3 alone, and Apple is happy with having a premium low production volume speaker, then they would continue to produce it.
It tried to satisfy all these conflicting objectives and that's why it failed. The new mini is more succesful because it only tries to do #1 and 2 without conflict.
1. primarily a homekit/Siri assistant?
2. driver of Apple Music subscriptions?
3. high cost and high quality audiophile streaming speaker?
#2 and #3 are in direct conflict since the high cost deters many so it won't drive many subscriptions. The main reason for Apple music's market share is the iPhone and not the Homepod which is a rounding error in comparison.
#1 conflicts with #3 due to price as well.
If #3 alone, and Apple is happy with having a premium low production volume speaker, then they would continue to produce it.
It tried to satisfy all these conflicting objectives and that's why it failed. The new mini is more succesful because it only tries to do #1 and 2 without conflict.
There aren't beter options available for Apple Music subscribers, 60 million worldwide, 33 million in the United States where Apple Music is bigger than Spotify. Sure, you can use Bluetooth or AirPlay to connect to other brands of speakers, but one of the primary points of HomePod is its outstanding convenience. Plug it in to power, wait 15 seconds, 50 million songs.
Sorry, but that’s just not true. Sonos natively supports Apple Music (with a whole lot more) and in my opinion sounds better; I have both a HomePod and various Sonos speakers including the Move which not only sounds better but offers far more real world options due to its portability, weather resistance etc. If Apple allowed more control over the tone of the sound (bass / treble) I might change my mind in that respect, but listening to Sonos and the Homepod side by side Sonos sounds better to me.
Sorry, but that’s just not true. Sonos natively supports Apple Music (with a whole lot more) and in my opinion sounds better; I have both a HomePod and various Sonos speakers including the Move which not only sounds better but offers far more real world options due to its portability, weather resistance etc. If Apple allowed more control over the tone of the sound (bass / treble) I might change my mind in that respect, but listening to Sonos and the Homepod side by side Sonos sounds better to me.
The people on the fence with HomePod are now motivated to buy one as it's been discontinued. Those who still won't bite can wait a few years until a new one is introduced, Apple is always moving forward and innovating and Music is a huge growth category for them. I can tell you that none of the owners of the 15 million HomePods in circulation are going to just buy Mini's when the time comes. Apple knows this.
No. That would have prevented sellthru on the remaining HomePod inventory, and Apple isn't one to announce a new product many months or years before its ready. It's smart business to flush out the HomePod's in Apple retail stores, Best Buy, and the other brick and mortar that need to move on. Those retailers need HomePod to go away so they can take those dollars and buy Mini's. When Mini slows, HomePod 2 will appear.
I have two theories:
First, the pandemic has put a huge strain on supply chains worldwide and the HomePod 2 isn't a priority. M1 Macbooks, iPhones, and AirPods are. With everything from circuits to plastics to shipping containers being in tight supply and the world focused on producing and shipping PPE and vaccines, an expensive mono streaming speaker isn't where the focus should be.
Second, HomePod hurts Mini sales, and Mini hurts HomePod sales. In retail stores where they sit side-by-side for A/B comparisons and share inventory dollars. Not a bad idea to give Mini a chance to shine. And retailers like Amazon and Best Buy and John Lewis and the like need something to get the HomePod inventory they have remaining out so that they can buy more Mini's. It's not prudent business to add a third HomePod when the first one is still sitting there and is now handicapped by a cheaper alternative.
You missed the actual problem:
4. It was designed to sell at $349, it only sold well at $249 and $199, and Apple loses money every time one has sold since 2019. Apple bought too many, they're finally sold down, and now Apple can design a new version with the same great sound quality at a price that doesn't cause them to lose money.
See above. The issue isn't demand. The issue is that it costs Apple $215 to make and sells properly at $199. So Apple needs to redesign it so that it actually makes money.
The Mini can try to be a personal assistant and a smarthome manager and it will fail. Because Apple isn't in either of those businesses. Google will crush Apple forever on Search criteria and information. Amazon will crush Apple forever on IoT support because they are the world's biggest retailer and carry every nonsense smarthome item from doorbells to voice controlled toilets. There is no competing with a Google microphone disguised as a 'speaker'. Siri ain't Google.
From a Music standpoint, the Mini will be adequate for many people. It will sell well because its cheap. But there will still be an audiophile business bigger than Sonos for Apple to take if they want it. And they do. Apple Music depends on it.
The pandemic affected everybody but supply chains especially in the electronics arena have been back up and running since last August. The problem was cost and the market has dictated how much people want to pay for a smart home speaker.
Apple are attempting to be a smart home assistant company as they’ve released the HomePod and promote HomeKit products through their own AppStore. Unfortunately the products they sell are more expensive than the competition but that is Apples choice.
The audiophile market is niche and if you go after that with an Apple only approach, it’s even smaller again. If they aim for the HomePod to be like their attempt at a mid range high end priced headphone like they’ve done with the airpods max, then they might as well be content with low sales and not withdraw what they offer.
Spot on, @boltjames.
Apple is a design company, driven by the Industrial Design team. They try to make the best/most beautiful device possible, which is easy to use.
As a result of their Industrial-Design-led product development & iteration process —> Apple usually ends up attracting the PREMIUM end of each market they enter/compete in. This is highly PROFITABLE.
Also Tim Cook and his CFO have stated on quite a few of the shareholder conference calls — their product pricing is always based on product (profit) margin. Ie they will almost never sell products at a loss.
- This is probably why they’re “discontinuing” the HomePod & selling off all their current stock. As @boltjames said, HomePod sells at $199, but likely costs $219 to make.
- Apple pricing is usually at least 40% profit margin —> $350 RRP = $210 cost price ($350 * 60%). But this is just an educated guess.
- Apple focuses on selling profitable products (“profit share”), not “market share” (number of devices sold)
This is what many tech reviewers don’t understand, when they keep bashing Apple for having “low market share”.
If you want to be the most profitable company — “market share” (in terms of number of devices sold, eg Amazon Echo, Android smartphones) does NOT matter.
What matters is
1. EXCELLENT PRODUCT: Product design/function excellence, Marketing excellence, & Supply chain/operational excellence
2. PROFIT SHARE: The share of the market segment’s profits — Apple is almost always NUMBER ONE for Profit share, in all the segments they compete in.
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I agree with you @AEWest, re the conflicting objectives & confusion for the general public.
Apple made a mistake here assessing what the market wants in terms of “smart assistants/smart speakers”, and is now taking corrective action.
If Apple’s original intention was to sell a “smart assistant/smart speaker” to increase market share/dominance for Apple Music, in the Streaming music (Services) segment, they should have designed & sold the HomePod mini first. NOT the HomePod.
I think this is actually what is happening now Tim Cook and his team have realised their product lineup gap in making a cheap mainstream “smart microphone/smart assistant”, that Amazon Echo & Google Home mini have been dominating in terms of number of devices sold/given away for free.
The HomePod mini is important for Apple in these areas (reflected in #1 & #2 of your post):
- Apple Music subscriptions
- HomeKit & smart home integration
- Services: namely Apple TV+, Apple Fitness+, Apple Arcade, etc
- Siri — which is now transitioning to a role as both Apple’s smart assistant + Apple’s universal search (incl web search) + Apple’s Siri Shortcuts (easy way to run Shortcuts & Siri Shortcuts from the Shortcuts app).
WHY APPLE SOLD HOMEPOD FIRST
I think the reason Apple designed & sold the HomePod first, HomePod mini second (years later), is because they are a design company.
They wanted to enter the “smart speaker/smart home hub” segment, so Apple’s Industrial Design team did their usual thing — they designed the best audiophile speaker for a reasonable price.
Whereas their competitors (eg. Amazon, Google) focused on selling cheap “smart assistant/smart home hub” that they marketed as “smart speakers”.
- What apple didn’t realise then, is that these lower-quality speakers are good enough for the general public.
And over the last few years, the Smart home devices market has continued to grow, making it essential for Big Tech companies to sell a cheap mainstream “smart assistant/smart home hub” nowadays.
Apple took a few years to realise that they need to sell a cheap “smart assistant/smart home hub”, and NOT just an audiophile-level $350 “smart speaker/smart home hub” — hence the HomePod mini released late last year.
This is my educated guess anyway, which makes sense to me.
IS THE HOMEPOD A COMMERCIAL FAILURE, OR NOT?
Now this is the part that has been a big sticking point between the “failure” camp, and the “success” camp.
I feel that both camps have valid points.
HomePod is a “failure”, in terms of:
- “MARKET SHARE”: (Ie number of devices sold/given away for free)
- MASS MARKET PRICING: finding the right product pricing to sell many units — I think it’s clear they misjudged the market here and the $350 pricing doesn’t sell that many units
- AS A CHEAP SMART MICROPHONE/ASSISTANT: a significant failure. Big Tech nowadays all need a cheap “smart assistant/smart home hub” device like Amazon Echo/Google Home mini. Hence Apple needs to sell a product like HomePod mini, because of the 4 reasons I discussed earlier in this post.
- DRIVING SERVICES GROWTH:
- Apple Music subscriptions,
- Apple TV+, Apple Fitness+, Apple Arcade subscriptions
HomePod is a “success”, in terms of:
- PRODUCT DESIGN: Creating an awesome audiophile-quality product, at a reasonable/lowish price
- SOUND ENGINEERING: based on what the audiophiles tell us
- CONTRIBUTING TO APPLE MUSIC SUBSCRIPTION GROWTH (Feb 2018-Mar 2021): See quote below
- NUMBER OF UNITS SOLD, WHEN COMPARED WITH OTHER SMALLER COMPANIES: What constitutes a “failed” product in Apple’s world, ie insufficient profit margin, and relatively low units sold — is often a big success if you were any other non-Big-Tech company. 15 million units of HomePod sold over the last 3-4 years, is a relative “failure” in Apple’s case. But if Spotify or Sonos sold that same amount of units for a single SKU (ie a single specific model of product), it would be A MASSIVELY SUCCESSFUL product for them. So it’s a matter of opinion & different expectations.
IS THERE GOING TO BE A HOMEPOD 2/HOMEPOD MAX?
I believe so. I agree with @boltjames on this point.
My reasoning is simple — Profit.
There is a (non-mainstream) segment of audiophiles who are in Apple‘s ecosystem and want a audiophile-level ”smart speaker” like the HomePod. This is a highly profitable market, which Apple can and should continue to stay in.
So my educated guess is:
1. MAINSTREAM SMART ASSISTANT/SMART HOME HUB: HomePod mini
2. AUDIOPHILE SMART SPEAKER/SMART HOME HUB: HomePod Max/HomePod 2
And no, Apple has never (with rare exceptions), and will never announce a product BEFORE they launch the product. So their press releases/spokespeople will not give us much clues/info on future products.
- EXCEPTION: (Tim Cook &) Phil Schiller made that mistake with announcing AirPower, and look at the disastrous results. Apple operates on secrecy, and it’s been wildly successful so far. No need to change a winning formula.
NEW RUMOUR: VIDEO HOMEPOD/VIDEO HOMEPOD MINI UNDER DEVELOPMENT
ADDIT March 22, 2021:
HomePod successor confirmed. May even become a video smart home hub device.
(Or alternatively, this video smart home hub device may be a video version of HomePod mini). 👇🏻
Apple Developing New 'HomePod' Models With Screens and Cameras
In a report today focused on an unactivated temperature/humidity sensor in the HomePod mini, Bloomberg's Mark Gurman briefly mentioned that Apple...
www.macrumors.com
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Apple has a select few factories and components manufacturers who supply them. The entire Macbook line is being relaunched and redesigned at the same time, a massive undertaking and a far bigger priority than HomePod. Apple also likes to have a strong piece of new hardware to launch a new service. HomePod HD or HomePod Max would be the perfect choice when lossless Apple Music HD launches at some point this Fall or next Spring. There is more than enough rationale for Apple to pause the bigger HomePod as opposed to making a quick transition.
Disagree. Apple is reluctantly participating in the IoT business without actually being in the IoT business. Siri is a voice remote control, not a search engine, not a IoT operator. Sure, Siri can attempt to be those things, but will always be behind Google and Amazon. It's a pity that Alexa and Google Mini chose the form factor of a speaker when they are microphones. It Alexa and Google Mini were lamps then Apple wouldn't feel compelled to stuff their HomePod with weak Google and Amazon functionality.
I actually believe they are content. The only reason HomePod has been discontinued is because it costs $219 to build and sells for $199. Apple is pleased with HomePod sales. Clearly they are aghast that they lose money on each one they sell. So they are taking a timeout to rebuild it in a way that supports a $199 retail, a natural step-up from the $99 Mini. In two years you'll have two converging factors- the HomePod OG consumer will be longing for something new and the Mini customer will be looking for something better. HomePod Max at $199 will be a home run.
Great post(s) which, for obvious reasons, I agree with wholeheartedly.
The one thing I'll add is that you should take Apple Music Subscriptions and move it to the 'success' column. During HomePod's reign, Apple Music overtook Spotify in the United States to become the biggest streaming audio player in this country. Speaking for myself, and I'm sure millions of others, the desire to try HomePod was the motivator in getting a trial Apple Music subscription and eventually sticking with it for the long haul.
HomePod is an Apple Music accessory. And it did its job of providing significant growth splendidly.
Happened to be at Best Buy over the weekend and took a listen to the Sonos One SL (No mic/Alexa) because I had imagined this would be my go-to if one of my HomePods dies out of warranty. I had always imagined it would be a suitable/workable replacement at a $180 price point. It sounded okay to me, but not great if I'm honest. I came away no longer thinking that would be a good alternative.
I'm still hoping Apple is working on a full size replacement for the HomePod. Something less sophisticated, but with the same bass and overall sound. I'm imagining a unit with maybe a single tweeter, that same 4" woofer (How the heck did they get that much bass out of a 4" woofer?) and a mic - Cheaper to make, $200 retail, and the same S5 as the mini. I think it would be a shame if they gave up entirely.
I'm still hoping Apple is working on a full size replacement for the HomePod. Something less sophisticated, but with the same bass and overall sound. I'm imagining a unit with maybe a single tweeter, that same 4" woofer (How the heck did they get that much bass out of a 4" woofer?) and a mic - Cheaper to make, $200 retail, and the same S5 as the mini. I think it would be a shame if they gave up entirely.
I agree in that Apple wants a hi-fi speaker, but I disagree that they were pleased with sales. They probably only announced a discontinuation because of old stock. Source? My two new HomePods, purchased last week, came with iOS 11.2.5 with packaging to support they were part of the original production run in 2018 ("requires iPhone 5s or later", labels slightly faded).
Had they actually NOT dropped the price from $350 to $300, I probably would've kept the first one I bought in 2019. I returned it because the price drop made me feel like I'd been played.
By all indications, Apple ordered too many HomePods for launch. That does not mean they were disappointed with sales at $249 or $199. Consumer electronics retail isn't a perfect science. Lots of guessing involved, especially on a somewhat new market for them. The date on a package doesn't matter. These aren't bananas.
That's a shame. Perhaps when they introduce HomePod 2 at $249 or $199 you'll feel like you got a good value.
Apple are a design company but have changed their philosophies on this in recent years due to consumer trends changing. Where Apple used to just focus on the high end part of the market, they now compete across low, mid and high end in order to maintain profits. The iPhone, iPad, Apple Watch and Mac range all have offerings in price points outside of the high end markets now, whereas previously Apple didn’t need to compete. Times change and much of this is due to tech lasting longer with high end products not being changed as often by consumers.
I think Apple have realised the demand for a £349 Apple speaker is not as high as that of a £99 one. It’s essentially a waste of resources at this point and they have significant competition in the mid range audiophile market.
Odd, when I listened to the HomePod inside a steel mill, it didn't sound quite as nice as the Sonos.
Amazon also sell Echo’s that are purposely designed as speakers. I think you’re referencing the Echo Dot which is effectively a low quality speaker and primarily a microphone. Amazon have also invested heavily in their streaming services which is something Apple should be much better at but seems to be a market that they have ignored.
Good point @boltjames. 👍🏻
I’ve updated my previous long post to include Apple Music subscription growth (Feb 2018-Mar 2021) under “success”.
- Though I personally think Apple Music has even more room to grow market share with the introduction of HomePod mini. (I’ve left this point under “failure”)
Link to my long post (click here)
Another update to my long post above — new rumour from Bloomberg’s Mark Gurman (who’s got a pretty good track record of accurate rumours) — re Video HomePod/Video HomePod mini now under development 👇🏻
Apple Developing New 'HomePod' Models With Screens and Cameras
In a report today focused on an unactivated temperature/humidity sensor in the HomePod mini, Bloomberg's Mark Gurman briefly mentioned that Apple...
www.macrumors.com
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Disagree. Apple is reluctantly participating in the IoT business without actually being in the IoT business. Siri is a voice remote control, not a search engine, not a IoT operator. Sure, Siri can attempt to be those things, but will always be behind Google and Amazon. It's a pity that Alexa and Google Mini chose the form factor of a speaker when they are microphones. It Alexa and Google Mini were lamps then Apple wouldn't feel compelled to stuff their HomePod with weak Google and Amazon functionality.
Apple IS in the IOT business, they sell lots of this category on their own website and even refer to it on the HomePod page on their website and as others have mentioned, their keynote went through this stuff too. Your argument that they're not an IOT company because they don't have a search engine misses the mark; Amazon is an online retail store, doesn't have a search engine but is most definitely in the IOT business. I think you're mistaking your view of Siri's capability with what it SHOULD actually be; Siri may function well as a voice remote for music but so does Google Assistant and Alexa, however, if that is all that Apple intended Siri to be it would be like the old days of the iPods voice control before Siri even appeared (why didn't they leave it as that if that is what it is supposed to be)?
You just sound like where Apple falls short you're making excuses because you don't want to admit that they've misjudged the market or made a mistake. If Apple releases the rumoured car further down the line and it does't offer certain features that other car makers have are you going to blame the other car makers because reviewers will be making comparison because, you know, it's one brands car being compared to another??
Apple IS in the IOT business, they sell lots of this category on their own website and even refer to it on the HomePod page on their website and as others have mentioned, their keynote went through this stuff too. Your argument that they're not an IOT company because they don't have a search engine misses the mark; Amazon is an online retail store, doesn't have a search engine but is most definitely in the IOT business. I think you're mistaking your view of Siri's capability with what it SHOULD actually be; Siri may function well as a voice remote for music but so does Google Assistant and Alexa, however, if that is all that Apple intended Siri to be it would be like the old days of the iPods voice control before Siri even appeared (why didn't they leave it as that if that is what it is supposed to be)?
You just sound like where Apple falls short you're making excuses because you don't want to admit that they've misjudged the market or made a mistake. If Apple releases the rumoured car further down the line and it does't offer certain features that other car makers have are you going to blame the other car makers because reviewers will be making comparison because, you know, it's one brands car being compared to another??
I believe that Apple should focus on the lifestyle side of the home, and not worry about voice controlled lights.
By lifestyle I mean audio and video. They should create a midrange soundbar that integrates ATV and includes a 1 year subscription to Apple + streaming and 1 year to Apple Music. That would provide a good value proposition to many average consumers - the hardware would be used far more often than a stand alone speaker.
Then they could add additional speaker components like an updated Homepod, maybe a subwoofer (obviously a lower volume product) etc. Basically become Sonos+ because they have the content, not just hardware.
By lifestyle I mean audio and video. They should create a midrange soundbar that integrates ATV and includes a 1 year subscription to Apple + streaming and 1 year to Apple Music. That would provide a good value proposition to many average consumers - the hardware would be used far more often than a stand alone speaker.
Then they could add additional speaker components like an updated Homepod, maybe a subwoofer (obviously a lower volume product) etc. Basically become Sonos+ because they have the content, not just hardware.
You are comparing Apple as a retailer to Amazon as a retailer and it's game over. Have you been to the Apple website lately? They carry about 30 IoT items. Amazon must have 500. And the point isn't whether or not Apple believes in IoT. The point is they can never be as good as IoT as Amazon. Because Amazon has hundreds of IoT partners. Apple has like 10.
That is not my argument at all. In the world of "smart microphones disguised as speakers" you've got two major competitors- Amazon and Google. Amazon I've explained, they will always have a huge IoT advantage. Google is obviously a search engine and Siri will never even come close to the type of data and encyclopedic knowledge that Google has. I shouldn't have to explain this, it's obvious. It's also why its so unfair for bloggers and tubers to slam HomePod on the grounds that it's not as good as Alexa and Google Mini. It can never be.
Apple needs to play to its strength with HomePod and it's not IoT (HomeKit) and it's not Search (Siri). It's Music. Apple makes great audio products and they are the biggest streaming music platform in the United States. HomePod wins on audio quality, hands down. If you want to turn on a lightbulb, get Alexa. If you want to help your kid with social studies homework, get Google. If you want to listen to all the detail of the White Album, get HomePod.
No excuses. Siri will never be Google and HomeKit will never be Alexa. Simple stuff. As for an Apple car, AppleCar will never be Ford either. It's not about a "brand battle". It's about business models. Google is a search company. Ford is a car company. Apple can try to be a search company or a car company but they won't be as successful. Apple's wheelhouse is computers, smartphones, and streaming.
This. Perfectly stated. Apple has nailed Music. iPod. iTunes Music Store. Apple Music. AirPods.
A Soundbar for a home theater. Mini for quick control everywhere. HomePod Max as a standalone room-filling stereo system. That's what they should be focusing on. I still believe they should be making TV's, expand further from Audio into Video, I'd buy a 65" Apple Television with built-in ATV and HomePod speakers. Apple is already big into displays, every iPhone, iPad, Macbook, and Watch has them.
Stop with the IoT and Search distractions. Bring the whole Audio + Video experience together. Focus on sound and video quality.
Well for one thing, the HomePod will very unlikely still be functioning after that massive amount of time, so this is a pretty pointless discussion honestly
Apple should have bought Sonos when it had the chance. At least Denon and Definitive Technology are now starting to make AirPlay 2 speakers among others.