Rumored Apple Plans Hint at Smart Speaker Battle Ahead

Apple has begun production of a high-end speaker with Siri-based digital assistant technology to compete directly with Amazon’s Alexa-based Echo speakers and the Google Assistant-powered Home speaker, Bloomberg reported Wednesday.

Production is in the early stages, but the device could be unveiled as early as next week at WWDC, Apple’s annual developer conference, according to the report. That would position the company to begin shipping in time for the winter holiday season.

Inventec, which manufactures Apple AirPods, reportedly has landed the deal to build the intelligent speakers, and has begun expanding plant capacity to handle the demand.

Apple aims to position its speaker not only as a digital assistant for the home, but also as a high-end audio device that will compete with Sonos and other leading speaker manufacturers, according to some reports.

Apple already is a dominant player in the digital music arena with its iTunes music and video library.

The device currently in production will have virtual surround sound technology and possibly will include sensors that automatically adjust volume based on the acoustics where the speakers are being used, according to the Bloomberg report.

It also may use the company’s HomeKit, which already works with Siri technology to automate the home, to act as a hub for home appliances, lights and other devices.

Street Talk

Speculation about the launch of a Siri-based speaker has heated up in recent weeks, following last month’s report from KGI Securities analyst Ming Chi Kuo, who said there was a greater than 50 percent chance that Apple would unveil such a device at WWDC, which would give developers time to write new apps for it in time for the holiday shopping season.

Apple had an installed base of 136 million iPhones in use in the U.S. as of March 31, plus another few million iPads and Apple computers. Most of the company’s customers owned more than one Apple product, according to Michael Levin, a partner and analyst at Consumer Intelligence Research Partners.

“It has also created a decent Home software suite that would allow whatever gadget they create to integrate its various hardware products — smartphone, tablet, watch, computers, etc. — into a home control system,” he told the E-Commerce Times. “We expect that over time, at least a few million U.S. users would try out its new service and become a competitor to Amazon Echo and Google Home devices.”

Apple TV Groundwork

Apple currently has some of same type of capability found in smart speakers built into its Apple TV box, noted Michael Jude, a research manager at Stratecast/Frost & Sullivan.

“This would likely be an adjunct device that would network to the existing Apple Home capabilities,” he told the E-Commerce Times.

“Apple has been angling towards a connected home capability for some time,” Jude remarked.

“Apple TV was sort of the opening salvo, but had a hard time getting traction because of its dependence on resolving content ownership issues,” he explained.

The rumored Siri-powered speaker “will extend Apple’s capabilities, but will still be a less capable offering than Amazon’s since it will lack the retail connections that Amazon can deliver,” Jude said. “It will, however, put it at parity with Google — perhaps ahead a little, since it will deliver iTunes and other content sources.

Third Parties Key

The strength of the Apple brand alone would provide the company with a competitive advantage with fans of the company, noted Jim McGregor, principal analyst at Tirias Research.

However, unless the company were willing to open the platform up to third-party developers and hardware providers, it would lag Amazon and Google, he pointed out.

“While being first to market with a home speaker device — the Echo — was a plus for Amazon, its real success is coming from all the third-parties that are looking at using Alexa on everything from smoke detectors to cars,” McGregor told the E-Commerce Times.

“Amazon also has a vast music library, book library and other retail ties to customers,” he pointed out. “I would not bet against Amazon.”

Maturing Market

Apple’s move comes at a time when the core iPhone market has begun to mature. At the same time, Amazon and Google have taken a big bite out of the red hot digital assistant market.

The Echo has propelled Amazon to record revenue and profits over the last couple of years, spinning off an entire new ecosystem of products that use its Alexa-based digital assistant technology.

Google launched its own ecosystem of products and services anchored by the Google Assistant-powered Home speaker. It has a treasure trove of consumer search data and natural language capabilities to drive the use of Android-based mobile phones and other products based on its advanced development of machine learning and artificial intelligence.