Amazon Prime Day’s chess move against Apple’s HomePod

The chess move? Amazon used the heavily promoted Prime Day to sell as many Amazon Echo devices as they possibly could, in part in an effort to disrupt Apple’s entry into the market with December’s HomePod rollout.

Brian Sozzi, writing for The Street:

Amazon said that it sold three times as many Echo devices worldwide midway through Prime Day. Imagine what the grand total looks like seeing as Amazon was hawking the smart speaker for a low, low price of $89.99. What this means to Apple is rather simple to understand: Amazon has managed to stuff more homes with Echos in front of Apple’s major HomePod launch. Hence, if you bought a discounted Echo why in the world would you want a HomePod, too?

While I do agree that Amazon is doing everything they can to maximize their home assistant market share in advance of Apple’s entry into the market, I disagree with the premise that Amazon is making big headway in eating future HomePod sales.

First, there’s price. $89.99 is a low enough price that it will not prevent someone from spending $349 to buy a HomePod. If the Echo was, say, $299, this might be a different story. But the vastly different prices puts the products in different market tiers.

Then, there’s capability. The HomePod gives inside access to the Apple ecosystem. The most likely candidates for a HomePod purchase have already invested in an Apple product, have made a little ecosystem nest out of music, files, apps and, most importantly, experience. While they might pop for $89.99 to give Alexa a try, I don’t see that sunk cost being enough to stop an Apple folk from buying into HomePod.

And folks who’ve heard both systems consistently say that HomePod is head and shoulders better sounding than Alexa when it comes to playing music.

What Amazon has not done is deliver a better quality speaker system which is also compatible with Apple Music. While Echo can act as a dumb Bluetooth speaker, you’d still need your iOS device or Mac in the loop to control the Apple Music experience, and that defeats the purpose.

I see HomePod entering the market in the same way as Apple Watch. The market is crowded, but crowded with devices that offer no real advantage to the Apple ecosystem. And to me, that’s all the difference in the world.

  • John Parkinson

    They’ve got it backwards. I might have bought an Echo or two at a discount in the Prime Day sale, but I didn’t because Apple already announced the Homepod and that appears to fit my needs much better so I can wait. Amazon aren’t stealing Apple’s future sales – Apple already stole (a portion of) theirs.

  • NB

    I’m still a little skeptical of audio being a differentiating factor for enough people, though. I’ve found for most people that the Echo is “good enough.” It’s like if there were a $499 competing version of the AirPods that maybe came in a nice black and had major sound quality improvements. Better? Sure. Worth it for most people? Probably not.

    Plus this ignores the factor of being able to plug in a speaker to an Echo to get better quality. Combined price, especially at $35-90, is gonna likely be less than the HomePod.

    • David Zentgraf

      Personally I have absolutely no interest in some smart home dingus, but I’m very interested in a small but great sounding speaker which magically streams all my music from the interweb. I don’t even care much about Siri as an addon.

      Yes, the sound absolutely is a distinguishing factor for me.

      • agreed. few years back i paid 2-300 for a good wireless speaker that does nothing else.

  • People keep making the mistake of thinking the HomePod is competing with Echo. It does not. Echo is for buying soap flakes, and Amazon spying on everything you do.

    HomePod is about Audio. Apple has a massive collection of high resolution music (all they’ve been getting from the music companies for years is high resolution). The Echo sounds like a tin can, and I don’t care if you can plug speakers into Echo, or use Bluetooth. The HomePod has the equivalent of an iPhone’s processing power inside. The Echo does not.

    Keep my privacy in the forefront is how Apple keeps me happy. Start acting like Google and Amazon, and I’m less likely to remain a faithful customer. Apple knows that about its users.

  • SDR97

    Apple is missing a huge opportunity if they make HomePod mainly about audio. So far, home automation is still for early adopters. Amazon connects to a nice, wide array of stuff, but you still need a separate hub from the echo and setup is too complex and confusing for most people to jump in. Apple should be moving to own this space by bringing clarity of UI to home automation, but HomeKit doesn’t work with nearly enough vendors (I know, Apple has high standards for compatibility that deter this) and more importantly, the Home app is really not any less confusing than using anything else. It’s very un-Apple-like.

    Feels to me like there would be a potentially huge market if Apple made HomePod itself a hub and made the Home app live up to the “it just works” standard.

    • dunno man, the Home app is so much better than Hue native app i stopped using theirs.

    • rick gregory

      Homepod will be able to control HomeKit connected devices, through, right? Even if you need an Apple TV to act as a hub, it’s very likely that Homepod buys will have one.

      Home automation, though, will never take off until it’s MUCH cheaper than it is not. People have talked it up for decades but the rationale is thin for most people. There are two basic arguments (aside from the “it’s cool!” one).

      You have the ROI argument – Nest used that to say “buy this $250 thermostat and save 20% off your heating and cooling bill” and the math works on that.

      Then you have the convenience argument “Tell Siri to activate the Morning scenario and heat gets turned on, a certain set of lights come on and the coffee starts brewing.” That’s nice, but total up the cost of all the sensors, switches etc and you’re into several hundred dollars to do that. Or I can get out of bed, flip on some lights, hit the thermostat to 68 and make coffee.

      • SDR97

        I agree with your take on the cost factor. I feel like this is a bigger problem for Apple than for Amazon, because Apple works with such a narrow (and generally expensive) list of vendors. I’ve got a lot of Wink and Cree lights around the house, but I’m not going to buy Philips Hue because I don’t need the color and they’re so expensive. So I keep using the Echo tied to the Wink which serves as hub for the lights. It’s cumbersome, with a lot of potential failure points.

        That said, for me home automation is like the Apple Watch — I don’t think I really need it, until I try to do without it for a while.

  • Meaux

    The Apple Watch has the advantage because it is tied to the iPhone, the market leading device in many key markets and the #2 pretty much everywhere else. The HomePod is linked to Apple Music, the #4 streaming music provider*, and excludes everything else. So no Spotify, Pandora, iHeartRadio. This is more like the Apple TV situation, but if you couldn’t get Netflix on it.

    • Looking at total users rather than paying subscribers
  • Mo

    I observed a bit of Prime Day Facebook chatter among acquaintances and their friends who either already had an Echo, or were considering buying one cheap. Some were folks who already had a stake in Prime’s music and video library, and seemed happy with it. None were lauding it as an audiophile’s device, but a few did seem to enjoy its other conveniences.

  • satcomer

    I can’t wait for the first hack of the always on Internet devices! Wait for the microphone to be government hacked!

  • GlennC777

    Prime day: a way to kill your productivity for an entire day to “save” a few bucks buying stuff you probably don’t need.

    Seriously – there is a serious question among economists as to why productivity seems to have stopped increasing; also as to why the internet doesn’t appear to have boosted productivity much if at all. Seems to me the answer is fairly simple, in that it allows time to be gained and encourages it to be wasted in approximately equal measure.