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For Smart-Home Speakers, a Possible New Competitor

Apple reportedly plans a speaker product

June 2, 2017 | Media

Apple is reportedly manufacturing a smart-home speaker that will compete with Amazon’s Echo and Google’s Home.

The manufacturing giant is expected to debut the new speaker at its upcoming Worldwide Developers Conference 2017 next week, Bloomberg reports. However, it’s not slated to ship until later this year.

The smart-home space is an area that Apple has yet to penetrate.

Apple is looking to differentiate its new device from its rivals by offering virtual surround sound technology, as well as tight integration with its many products, like its internet of things ecosystem HomeKit.

The new smart-home speaker is also likely to help boost another service the company has been continually focusing on: Apple Music.

But Apple faces some tough competition.

Amazon has been seeing a lot of success with its Echo line of devices, which are powered by Amazon’s Alexa virtual assistant system. In fact, sales of Echo devices surged more than ninefold over last year’s holiday season.

“Apple can compete with its rivals if the speaker is reasonably priced and if the company can present a compelling value proposition for why it is a top choice,” said eMarketer principal analyst Victoria Petrock. “For a long time, Apple has viewed smartphones and watches as the true intelligent connectivity hub. It seems they are rolling this device out to provide a larger-scale experience that extends that hub.

“Two big things Apple has going for it are brand loyalty and seamless product compatibility,” she added. “There are a lot of consumers who are loyal to the brand and who would love to see uncomplicated integration between their iPhones and iPads, Apple TVs and Apple speaker devices.”

So far, Amazon’s Echo and the Invoke smart speaker from Harman Kardon/Microsoft are being built to incorporate voice calling and messaging, but these devices are not as seamlessly integrated with smartphones the same way as the Apple speaker could be.

Integration between devices manufactured by different brands is often clunky and raises major compatibility issues.

“To some, it may be comforting to know there is an Apple speaker out there that will seamlessly integrate with the iPhone and Apple family of products,” said Petrock. “It remains to be seen whether Apple will pursue an exclusive product compatibility strategy, or one in which it makes products from other manufacturers compatible with its HomeKit platform.”

US Voice-Enabled Speaker User Share, by Player, 2017 (% of total)

While still far from hitting mass adoption, virtual assistants like Siri and Alexa are becoming more widely used by Americans. According to eMarketer estimates, 35.6 million Americans will use a voice-activated assistant device at least once a month this year—that’s a jump of 128.9% over 2016.

eMarketer expects Amazon’s Echo speaker will control 70.6% of the US market this year. Meanwhile, Google Home will trail significantly with a 23.8% share. The remaining share will be portioned among smaller players, such as Lenovo, LG, Harmon Kardon and Mattel.

Rimma Kats

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