On Friday, Apple Inc. (NASDAQ:AAPL) confirmed that the HomePod — the company’s first smart speaker — will be delayed. Instead of arriving in time to capture holiday sales, it won’t be released until 2018. The Apple HomePod delay didn’t have a noticeable effect on AAPL stock, and the company is trying to put a positive spin on it.
However, there’s no avoiding the fact that having the HomePod delayed is a blow for Apple that will impact its holiday quarter and make its battle for smart speaker market share even tougher.
Apple Confirms HomePod Delayed Until 2018
Tech news outlets began reporting on Friday that the HomePod — Apple’s long-awaited, $349 premium smart speaker — was not going to be released this year. Since its announcement at WWDC 2017, Apple has said the Siri-powered HomePod will arrive on Dec. 1. On Friday, it acknowledged that the HomePod would be delayed, changing its website to read “Available early 2018.”
The company told CNBC:
“We can’t wait for people to experience HomePod, Apple’s breakthrough wireless speaker for the home, but we need a little more time before it’s ready for our customers. We’ll start shipping in the US, UK and Australia in early 2018.”
With the Apple HomePod delay, Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google — the smart speaker industry leaders — have a big holiday season to rack up more sales. The smart speaker market is expected to be worth over $13 billion by 2024. Last Christmas, Amazon said it sold millions of Echo speakers, nine times as many as the previous year, with two Echo smart speakers being its top-sellers for the entire site. At this point, the Amazon Echo controls 76% of the U.S. smart speaker market, with Google Home snapping up the other 24%.
This year was shaping up to be a true battle, with Amazon and Google both releasing new smart speakers for the holiday season, and the HomePod finally entering the mix after several years of sitting on the sidelines for Apple. But with the HomePod delayed until 2018, Amazon and Google have another holiday season to cement their lead.
Apple HomePod Delay Could Impact AAPL Stock
In August, I wrote about how Apple was positioning itself for a blowout holiday quarter.
The company would be going into the Christmas holidays with an iPhone upgrade super cycle about to kick off, a new 4K Apple TV, the Apple Watch Series 3 and the HomePod. On last year’s much more modest new product lineup, Apple set a quarterly revenue record that caused AAPL stock to surge nearly 5% when the numbers were announced.
This holiday quarter is looking a little less spectacular than it did back in August, though. The Apple Watch 3 is selling better than expected, but the staggered iPhone release combined with constrained iPhone X supplies are having an impact. That iPhone upgrade super cycle looks like it’s going to be spread across multiple quarters. And with the HomePod delayed until 2018, a key product will be out of the mix altogether.
The more lasting damage is likely to be the lost market share opportunity the Apple HomePod delay is going to cause. Smart speakers are having a moment and this year the new offerings from Amazon and Google — along with Microsoft Corporation (NASDAQ:MSFT) and numerous smaller companies — will be duking it out for holiday shopper dollars. In the frenzy to give smart speakers as gifts, it’s unlikely that consumers will wait until 2018 for the HomePod. As a result, trying to claw back smart speaker marketshare from Amazon, Google and the rest is going to be even more difficult.
It’s not like the HomePod was expected to sell enough units at Christmas to move the AAPL stock needle — at least not yet. But smart speakers are a big market that’s getting bigger even as competitors like Amazon and Google are entrenching themselves. The Apple HomePod delay comes at an unfortunate time that will make it tougher for the company enter the market, and to build the kind of market share it was hoping for.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.