HomePod won’t unseat Amazon in the smart speaker market (but I doubt Apple’s worried)

Apple’s launch of HomePod has intensified the competition in smart speaker market. According to TrendForce, Amazon Echo still tops the ranking of smart speaker products in 2018 with a market share in shipment of 50.8%, although down from 69.1% in 2017. 

The share of Google Home is projected at 21.6%, ranking the 2nd. The new Apple HomePod is expected to reach a share of 8.9%, while the numbers for Alibaba’s and Xiaomi's smart speakers will be 6.3% and 5.1% respectively, adds the research group.

TrendForce analyst Tom Tien points out that apart from first movers like Amazon and Google, the smart speaker market is expected to draw more attention after Apple joined the competition. Alibaba and Xiaomi have also introduced related products, driving the entire market to flourish.

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Overall speaking, smart speaker is the interface for smart home devices. Although many companies have entered this market, Amazon remains the leader thanks to its establishment of a complete business ecosystem, Tien says. In the U.S. market, for example, applications supported by Alexa have reached more than 25,000. Together with a wide range of products and low prices, consumers are more willing to buy Amazon Echo.

Tien points out three main challenges for HomePod that may influence its product acceptance in existing market. First, HomePod puts more focus on audio performance than intelligent home assistance which should be the core value of smart speaker. 

Second, the business ecosystem for Apple has a high standard so that application providers may find it difficult to enter. As the result, HomePod’s limited support for third-party apps will make it harder for HomePod to fully realize the functions of smart speaker. 

Third, some functions of HomePod overlap with Siri in iPhone. 

The above three factors may affect HomePod’s sales, so TrendForce forecasts that Amazon will still dominate the smart speaker market in 2018. Of course, at $349, the HomePod doesn’t have to overtake Amazon in the number of units sold for it to be immensely lucrative for Apple.