Apple Inc. acquired Beats by Dre in 2014. It was the largest acquisition in Apple's history and many investors were perplexed by the decision at the time. Apple has integrated the Beats team into their Apple Music iniative, but one area where the two companies continued to work in parallel has been in the audio accesories business.
Apple released their AirPods wireless earbuds and have seen some competition from the likes of Google, but they also allowed for Beats to release headphones and earbuds powered by the W1 chipset. AirPods have sold rather well and there seems to be plenty of room in the earbuds space for Apple, Beats and their competitors.
This isn't true of Apple HomePod, the company's entrance into the smart speaker space. HomePod costs more than Amazon Alexa and Echo as well as Google Home. It goes beyond cost for Apple, as HomePod has limited functionality compared to its competitors. Over 7 years since Siri's introduction and Apple can't seem to get voice control UI right. HomePod is also leaving white rings on wooden tables, an oversight that really highlights the fact that Steve Jobs is no longer at the company to obsess over the slightest details.
HomePod's lackluster debut has Apple reportedly cutting orders internally for the smart speaker. What truly baffles me about this whole situation is that Apple has a perfectly good brand in its portfolio which has a strong track-record of selling overpriced audio products, Beats. I believe Apple and Beats could have gotten away with some of the technological shortcomings of HomePod if they branded their entrance into the smart speaker market as the new Beats Pill. That mediocre Bluetooth speaker sold like gangbusters in spite of the fact that some of them had to be recalled due to a risk of explosion. Most Beats products are priced at a premium level that customers are used to paying up for in the name of cool. Apple HomePod doesn't have the cool factor that Beats products carry, and I believe this was a missed opportunity by Apple.
Apple HomePod is not a bad speaker. In fact, many reviews speak very highly of the audio quality being produced, but the product is failing to compete with much cheaper products like Amazon Alexa and Google Home. Apple should repackage a lot of this technology into a Beats Pill form factor to attempt to capture the segment of the home speaker market who buy into brands as opposed to functionality.
It remains to be seen how Apple will respond to the lackluster sales of HomePod, but a pivot to a Beats Pill release is something that would be easy to do. No matter what, Apple's next huge revenue segment is not likely to come from smart speakers and the company seems very focused on its services revenue which includes the rapidly-growing Apple Music streaming service.