The Chinese market can't save Apple's HomePod

The Chinese market has not brought any changes to HomePod shipments.

In 2020, Apple released a number of new products intensively.

The 5G-enabled iPhone 12 series, the new Mac equipped with the M1 chip, the latest updated iPad and Apple Watch… they appeared under the flash lights one after another, adding a lot of luster to Apple’s $2 trillion market value.

But in the dimming of lights, Apple has a new product: the $99 HomePod mini.

Recently, HomePod mini landed in China, giving Apple a stronger presence in the Chinese smart speaker market - but the price of 749 yuan has reassured its local competitors.

In fact, among the mainstream players in China's smart speaker market, Apple is the only foreign brand.

1. HomePod: Born late and born alone

Apple released HomePod in June 2017 - more than three years ago.

At that time, the smart speaker battlefield was already in full swing - especially in the United States, where Apple's headquarters is located. Amazon Echo and Google Home were both frantically encroaching on the market. Amazon entered the smart speaker market as early as the end of 2014, and Google in 2016.

Not only was the HomePod late to the market, it was also expensive, costing $349. 

But Tim Cook did not take his competitors seriously. He said in an interview at the time:

We never make a product first, but we want to make the best one. We want to surprise our users, so we won't release a product that we think is bad.

Image source: Bloomberg

He also said that Apple is a company that loves music very much and wants to provide users with a better home music experience - he also said that since Apple reinvented the portable music player, it should do the same for the home music player.

To this day, Apple's official website places HomePod under the Music column.

Having said that, HomePod was released late and launched even later - more than half a year after its release, it was not officially released until February 2018. After users got it, the result was the same as what Tim Cook said: it is indeed an exceptional home music player.

At the same time, there are reasons why HomePod is so expensive. According to data released by TechInsights, the material cost of HomePod is as high as $216.

However, it is not smart at all, and Siri is like a mentally retarded person; not only that, in terms of support for third-party music platforms, it only supports Apple Music; not only that, it also does not support Bluetooth connections for devices of other brands.

In fact, in its final evaluation of HomePod, foreign media The Verge chose the word Lonely, which aptly describes a closed and stubborn HomePod:

It adheres to Apple's product concept of combining software and hardware. It is excellent on one side and mediocre on the other. It refuses to reconcile or cooperate, and proudly breaks into a new smart speaker battlefield.

2. HomePod missed 2018

In the first quarter of 2018, after HomePod was released in many countries around the world, its performance was not satisfactory.

At that time, the global smart speaker market was in the midst of an explosive growth period. According to a report on global smart speaker shipments released by market research firm Strategy Analytics, Amazon shipped 4 million units, and Google’s shipments grew sevenfold to 2.4 million units, thanks to the recently released Google Home Mini. Alibaba’s shipments in the Chinese market reached 700,000 units.

Apple only shipped 600,000 HomePods in the quarter, ranking fourth. 

This result began to worry Apple. According to Bloomberg, citing people familiar with the matter, Apple lowered its HomePod sales forecast and order quantity in late March of that year, and cut orders from supplier Inventec Corporation.

In the following second quarter of 2018, Apple ranked fourth again with 700,000 units shipped.

It is worth mentioning that Strategy Analytics is optimistic about this result. It said that Amazon and Google do not care about profit margins and only consider shipments, making it very difficult for manufacturers of smart speaker products with similar functions to enter the market; however, this also provides opportunities for the high-end smart speaker market.

The report believes that Apple has established an early lead in the high-end smart speaker market.

However, later facts proved that this was the second and last time Apple ranked fourth in the world. Since then, Apple's global ranking has never exceeded its ranking performance in Q1 and Q2 of 2018.

In the third quarter of 2018, China's smart speaker market exploded, with Alibaba, Baidu, and Xiaomi respectively grabbing market share in the Chinese market with their cheap models. Amazon, Google, and Apple continued to work in other markets outside of mainland China, seemingly independent of each other.

To some extent, there seem to be two smart speaker markets in the world, one is the Chinese mainland market and the other is the overseas market.

In that quarter, Amazon and Google continued to occupy the leading and second positions - while China's Alibaba, Baidu and Xiaomi ranked behind with 2.2 million, 1.9 million and 1.9 million units respectively, far exceeding Apple's 1.1 million units in the quarter.

That time, Apple ranked sixth.

Before 2018, Strategy Analytics' global smart speaker rankings often only gave the top five; but considering Apple's influence, it was not classified as Other, but continued to appear in sixth place.

3. The Chinese market won’t help HomePod

In the fourth quarter of 2018, which coincided with the shopping season, HomePod also saw a surge in the global smart speaker market, increasing by 45% from the previous quarter - of course, Apple's proactive price cuts were also a factor.

Even so, Apple still ranked sixth that quarter, accounting for 4.1%.

In fact, from Q3 2018 to Q1 2020, Apple ranked sixth in the world for seven consecutive quarters, and its market share has fluctuated between 4% and 6%.

Among them, in January 2019, Apple's HomePod business achieved an important breakthrough - it entered the Chinese market at a high price of 2,799 yuan, which is something that neither Amazon nor Google can achieve, and it is also another opportunity for Apple in the high-end market.

As a result, Apple has become the first international brand to actually enter the Chinese smart speaker market.

However, the price of 2,799 yuan is a touching price no matter from which angle you look at it; especially after China has experienced a round of smart speaker wars, the entire domestic smart speaker market has sunk to the hundred-yuan level - at this time, HomePod seems even more superior.

Of course, in addition to the price, Siri's intelligence and Chinese proficiency, as well as Apple Music's competitiveness in the Chinese online music market, have also led to doubts about its performance in the Chinese market.

Judging from the results, the Chinese market has not brought any changes to HomePod shipments.

According to data released by Strategy Analytics, HomePod's global shipments continued to increase in the four quarters of 2019, reaching 1.1 million, 1.4 million, 1.8 million, and 2.6 million units respectively - but at the same time, the global smart speaker market is also growing, increasing by 70%.

In fact, even after entering the Chinese market, Apple's market share in the four quarters of 2019 was still 4.3%, 4.4%, 5.1% and 4.7% respectively. In the first quarter of 2020, including the Chinese market, Apple shipped a total of 1.4 million HomePods worldwide, accounting for 4.9%.

At the same time, according to data from market research firm IDC, in Q1 2020, China's smart speaker market was firmly occupied by Baidu, Alibaba and Xiaomi, accounting for more than 96% - a serious Matthew effect has emerged.

The combined shipments of other players, including Apple, do not exceed 400,000 units.

Leifeng.com noticed that HomePod’s entry into the Chinese market actually coincided with the explosion of smart speakers in China, but it has always been classified as Other in the public data of data research institutions.

4. HomePod Mini is here

In 2020, due to multiple factors, the global smart speaker market showed signs of weakness.

Data shows that in the first quarter of 2020, the global smart speaker market grew by 8.2% year-on-year; in the second quarter, it was basically flat year-on-year, or even slightly declined; in the third quarter, the year-on-year growth rate returned to 2.6%.

It is worth mentioning that in the Q3 report, Strategy Analytics also stated that smart speaker users are increasingly turning to display-based devices or smart displays - the best-selling devices in the quarter were Amazon Echo Show 5 ($90) and Baidu Xiaodu at Home 1c (RMB 499).

The same trend is also unfolding in the Chinese market - IDC analyst Liu Yun also said this year:

While the COVID-19 pandemic has had an impact on China's smart speaker market, it has also accelerated the market's upgrading and development...The construction of an intelligent application ecosystem that is deeply connected with voice, vision and other interactive methods will become an important driving force for the subsequent development of the market.

At this critical juncture, the HomePod Mini, which still insists on good sound quality, has finally arrived, with a price that still seems a bit high, which seems a bit out of place.

Perhaps for HomePod, Apple has subjective considerations of insisting on product quality or pursuing profits, or has its own inherent product rhythm - but on an objective level, even with the support of HomePod Mini, it may be difficult for Apple to change the current smart speaker market landscape, both globally and in China.

After all, opportunities are always fleeting and never come back.