Apple unveils $349 HomePod to compete with Amazon Echo, Google Home

by Linda Olson June 8, 2017, 1:34

Apple is officially jumping into the home speaker market. Yet here we are.

The company announced a new voice-controlled speaker during its WWDC developer conference in California on Monday.

The company is reportedly working on a home speaker powered by Siri that could be unveiled during the conference, which would be a rarity for an event that traditionally features software and minor updates to hardware such as its Mac laptops. With the HomePod, it'll be "Hey Siri".

HomePod uses the company's A8 chip, which Apple also uses for its mobile devices.

Apple's entry into the market could change this. Schiller said devices like the Amazon Echo have poor sound quality, and wifi speakers like Sonos don't have interactive voice assistants. Only the most recent messages will be kept on the device to save storage space. And with Apple's HomeKit, Apple's proprietary wireless protocol for controlling third-party smart home gadgets in iOS, HomePod serves as a hub that can control connected lights and thermostats. The company as a whole has posted plump 38 to 40 per cent gross profit margins fairly consistent for years.

The new software also contains a "Do Not Disturb While Driving" mode, which Apple says will help prevent iPhones distracting those behind the wheel, and a new "Files" app that resembles a traditional computer file system for viewing and organising documents. Investors keep close tabs on Apple's margins, and Apple optimises its business to meet its gross-margin range. Apple said HomePods can pick up the commands from across the room with a 6-microphone array (compared to the Echo's 7 microphones and Home's 2 microphone). It's not clear whether Apple will turn a profit on the device when it officially hits the market later this year.

The price is quite a jump from Google's $129 Home and Amazon's $180 full-sized Echo. If the speculation pans out, the speaker would be Apple's first new product since its smartwatch in 2015. That's because the profit margin targets that have been sacrosanct increasingly look like handcuffs.

Apple Announces HomePod, its Answer to Alexa and Google Home
Microsoft also has announced its own speaker with Samsung's Harman business; it will use Microsoft's Cortana digital assistant. According to Apple , the smart speaker will only start collecting information after the "Hey Siri" voice command is activated.

With consumers less interested in buying new tablets, Apple has increased its focus on designing tablets for professionals to do much of the same work that they usually perform on a laptop computer. Augmented reality is the blending of the physical and virtual worlds. Both Apple and Amazon sold similar products for streaming, so this collaboration simply makes sense and is expected to reduce various caveats.

There is already evidence that Apple's gross-margin affection is holding the company back.

The conference is typically devoted to software updates and this year, Apple released a series of new features and updates for the iPhone, the iPad, Mac and the Apple Watch - including an augmented-reality kit for developers aimed at making the iPhone "the largest AR platform in the world".

AAPL says the Siri speaker will cost $349. She previously was a reporter for the Wall Street Journal.

Shira Ovide is a Bloomberg Gadfly columnist covering technology.

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