Last year, smart speaker sales went through the roof during the holidays. However, Apple (NASDAQ:AAPL) missed out on the boost altogether, when its HomePod was delayed. With this year’s holiday shopping season entering the final stretch, Apple is employing a rare tactic in an attempt to gain momentum: emailing HomePod discount codes to Apple Music subscribers.
Once considered to be a product with the potential to be the next big thing for Apple, the HomePod smart speaker instead has suffered from rather underwhelming sales.
At $349, it is expensive. Amazon (NASDAQ:AMZN) and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google division not only offer a huge range of smart speakers (starting at under $50 and including options with integrated displays), Alexa and Google Assistant are considered superior to Siri in their smart home capabilities.
The smart speaker global install base is approaching 100 million units, and Chinese competition is now hitting the market in a big way. In Q3, AAPL’s share of smart speaker sales was estimated at just 4.8% (Amazon and Google notched 31.6% and 22.7%, respectively), while some Chinese manufacturers, including 5th place Xiaomi, saw quadruple-digit year-over-year growth in unit sales.
In response, AAPL is taking the rare step of sending HomePod discount codes to Apple Music subscribers. At time of writing, MacRumors was reporting U.K. customers had received the e-mails, which offered £50 off HomePod’s regular price of £319 now through Dec. 16. That’s a roughly 15% discount, and in the U.S., it would likely translate to being able to pick up a HomePod for $299.
Everyone Discounts Smart Speakers for the Holidays
Last year, Amazon and Google moved a lot of units by slashing the prices of their smart speakers through the holiday shopping season. To the point where they likely lost money on each unit sold. However, any loss was deemed worth it to build market share and for Google, the strategy paid off with 6 million Google Home speakers sold during last year’s holiday shopping season.
This year, both Amazon and Google began cutting prices for holiday shoppers once again. At the time of this writing, it was possible to pick up an Amazon Echo Dot smart speaker for less than $20!
Obviously, AAPL is not going to compete against $20 Echo Dots with the $349 HomePod. Even with sale pricing, Apple is not going to win the volume game. However, with all the other major players offering sale pricing and some retailers knocking the price down below the $300 level in holiday sales AAPL offering a HomePod discount shows the company is at least making an effort to attract gift givers.
Going With the Flow
One of the biggest knocks against the HomePod — after its price — has always been that it is less of a traditional smart speaker, and more the ultimate device for listening to Apple Music. While the Amazon Echo and Google Home have been piling on the ability to interact with third-party smart devices and services, the HomePod’s strong suit has been using Siri voice control to interact with Apple’s streaming music service. With September’s iOS 12 release, the HomePod gained a few new features, including being able to use Siri to make phone calls or to check your calendar, but it still comes nowhere near the capabilities of the smart speaker competition.
Apparently Apple shrugged its shoulders and decided to play the cards it has been dealt for this holiday season. Sending a HomePod discount code to Apple Music subscribers directly targets the demographic that seems most likely to buy the smart speaker and knocks around 15% off the regular price.
As mentioned, at the time of this writing, only U.K. Apple Music subscribers had received the e-mail offer from AAPL. However, it seems likely that at some point today, Americans will also receive the HomePod discount offer in their inboxes, just in time for last minute gift shopping. It may not be a $20 Echo Dot, but $50 off is an unusual move for Apple.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
