Apple’s smart speaker, the HomePod, has struggled to gain market share. Apple’s revenue grew only 1.0% year-over-year to $53.8 billion in the third quarter of its fiscal year. While this low growth halted the company’s streak of negative growth, it was still a bleak reading. However, a bright spot in Apple’s third-quarter earnings was the Wearables, Home and Accessories segment. The segment generated $5.53 billion in revenue, an impressive 48% growth year-over-year.
The segment was likely helped by substantial growth in smartwatch shipments as well as AirPods. Apple’s two fast-growing segments—Services and Wearables, Home and Accessories—made up nearly a third of the company’s total revenue. Strong growth in these segments helped the tech behemoth tide over its iPhone woes.
HomePod is struggling to grow as Amazon and Google dominate
So why has Apple’s smart speaker, the HomePod, struggled to gain market share? Shipments haven’t improved despite the company cutting prices from $349 to $299 earlier this year.
The reason is that, despite the cut, Amazon and Google’s smart speakers remain way cheaper than Apple’s. Also, Amazon’s (AMZN) Alexa is developing by the day, and it remains far more sophisticated than Apple’s Siri.
According to research by CIRP, the installed base of smart speakers in the US was 76 million at the end of the June quarter, compared to 70 million in the previous quarter.
Amazon’s Echo has a massive lead, cornering 70% of the installed base in the second quarter. Meanwhile, Google Home and its variants had a 25% market share.
Apple’s HomePod continues to have a lowly 5% market share in the segment. This share means the HomePod has around a 3.8 million installed base in the US. Apple doesn’t disclose HomePod shipments.
Yet to make an impact on Apple’s top line
Remember, though, that Apple doesn’t need to have a high volume in shipments. Unlike Amazon’s Echo—which offers one variant for only $49—even a smaller shipment volume can help Apple’s HomePod revenue.
While smartwatches are slowly beginning to have a meaningful impact on Apple’s revenue, the HomePod isn’t. Unless the company makes some changes to the product, it’s unlikely to penetrate the market dominated by Amazon and Google.
Meanwhile, Apple’s revenue edged up in the June quarter, but its net profit fell nearly 13% year-over-year to $10.0 billion. Here are some of the factors at play that are hurting Apple’s margins.