Apple’s HomePod miscalculation will haunt the company for years

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homepod
Apple's premium pricing strategy for the first-generation HomePod may keep it from ever being really successful.
Photo: Apple

The fact that the HomePod isn’t selling well means that Apple has probably missed its chance to ever be a significant part of the smart speaker market, according to analysts from Deutsche Bank.

Sales of inexpensive rival devices are exploding, while Apple’s very pricy offering sits on the shelf. That may lock customers into non-Apple solutions.

The Deutsche Bank analysts feel that smart speakers are going to be important. A note sent to investors that was obtained by Business Insider says “While today’s devices are relatively simple and have limited capabilities, we believe they represent the future of how consumers will interact with their home environment.”

A tale of two price points

Amazon sells its Echo smart speakers by the tens of million, with prices that start at $49. Even the most elaborate version, which boasts a screen, costs $229. By contrast, HomePod starts at $349.

This premium pricing strategy is its undoing, according the analysts from Deutsche Bank. “In our view, this essentially limits the product’s market appeal to Apple fans who will pay anything for a new Apple device and to consumers with high disposable income.”

Everyone else is getting an Amazon Echo. And if they’re happy with it, they’ll stick with it, even if Apple releases a less expensive version of the HomePod later, as has been rumored. “Being early may be critical to a company’s success as it drives initial lock-in,” is the way the Deutsche Bank analysts phrased it.