News You might have missed: Week of April 13, 2018

Apple cuts HomePod Orders

Bloomberg reported this week that according to some Apple store workers HomePod inventory is piling in. It also mentioned that by late March, Apple had cut some orders with Inventec Corp, one of the manufacturers that build the HomePod.

Via Bloomberg

  • I always find it hard to draw conclusions from mentions of cut orders, especially when more than one manufacturer is involved. If I am not mistaken, Inventec has a very small volume of HomePods in the first place, compared to Foxconn, so a cut of orders on their volume might not amount to much.
  • Another source mentioned by Bloomberg as a proof that sales are slow are recently released numbers from Slice Intelligence. I looked into Slice Intelligence methodology back in 2015 when they published some Apple Watch numbers and when looking at their numbers one has to remember a few things:
    • The information is based on e-receipts that consumers opt-in to share through an iOS app. It seemed that their panel receipts mostly come from online discount websites and big-box retailers. Which would lead to believe that a more mainstream base is representative of the panel
    • I don’t believe Slice has visibility of what is sold through Amazon, which in this case does not matter for HomePod but of course matters for overall market size and share as it would exclude Echo devices.
  • I am not questioning the methodology. I am simply pointing out that the numbers might not be providing the full picture.
  • All that said I would like to remind people of the fact that Apple’s core addressable market for HomePod are Apple Music users which as of this week have reached 40 million paying subscribers. Of those, I think it would be fair to assume a good number of those users would already have a speaker or some kind of sound system in their home. Others might primarily listen to Apple Music on the go rather than in their home which would not make HomePod a priority buy. Lastly, some might find the price high, especially when not in a position to properly test the superior sound experience.
  • Hard to tell of course when the channel of a product is mostly Apple, so numbers are very hard to come by. If I had to come up with a volume I would expect the HomePod to sell less than AirPods.

Spotify and Hulu offer Subscription Bundle

The companies said Wednesday that a $12.99 per-month plan will get you access to Spotify’s ad-free music streaming service and Hulu’s basic package that allows you to stream TV shows and movies with some ad breaks.

Via CNN 

  • Currently subscribing to both services individually would set you back $18 with the bundle providing you a saving of $5. Also, if you are already a Spotify customer you could get Hulu for just an extra dollar for the first three months
  • It seems to me that this is a case a weaker player (Hulu) joining forces with a stronger brand (Spotify) in order to gain more traction. Hulu has been growing its original content to try and catch up to Netflix. Both Hulu and Netflix also have Amazon to contend with now, of course, Spotify remains the market leader in music but with Apple Music numbers growing steadily some differentiated value-add is not a bad thing.
  • I also wonder if Spotify is making a move early, with the expectation that Apple will be soon adding more video content to its Apple Music service.
  • It will be interesting looking at Spotify and Hulu’s numbers in the future to see who is taking most of the hit on the discounted rates. Billing will be done by Spotify which might signal that Hulu might be the one taking the bigger hit on the revenue side.
  • I am not entirely sure if this is the start of more bundles being offered but I do expect brands to come together more often to fight a common enemy. 

Xiaomi might be interested in GoPro

Chief Executive Officer Nick Woodman has said he is open to a deal and earlier this year the company hired investment bank JPMorgan Chase & Co. to advise it on a potential sale. According to The Information, Xiaomi might offer up to $1 billion but does not want to overpay.

Via Bloomberg 

  • This would be a great move for both GoPro and Xiaomi as it looks like a great fit.
  • As mentioned in the article, GoPro has been looking for a buyer for a while and this was driven by a continued lackluster performance. What were revolutionary products at launch have not really evolved much in recent years both in terms of design and capabilities.
  • At the same time, smarthphone camera improvements coupled with water resistant capabilities have meant that for non-hard-core daredevils who might have wanted to take action shots during their holidays a smartphone might just be enough now. This further limited the addressable market for GoPro who mostly relies on the US for the bulk of its sales.
  • In 2016, GoPro tried to add to its portfolio by entering the drone market but that did not last long as it seemed that GoPro was unable to keep up with growing competition from new startups as well as established names like DJI.
  • What makes Xiaomi a particularly good fit is that it would offer the content shot with GoPro cameras, either as standalone or integrated in a phone, a much easier way to be streamed thanks to the strong ecosystem of both apps and connected devices Xiaomi has in China and other markets.
  • Xiaomi should also be able to leverage the GoPro brand especially in markets like the US where the Chinese brand has yet to make a strong move with its smartphones. Leaving the GoPro team in California might also help Xiaomi in future market moves.
  • The distribution channel GoPro has will also be very valuable to Xiaomi with a presence in over 100 countries.
  • Of course, the deal might get the attention of regulators given the current trade environment with China.

Published by

Carolina Milanesi

Carolina is a Principal Analyst at Creative Strategies, Inc, a market intelligence and strategy consulting firm based in Silicon Valley and recognized as one of the premier sources of quantitative and qualitative research and insights in tech. At Creative Strategies, Carolina focuses on consumer tech across the board. From hardware to services, she analyzes today to help predict and shape tomorrow. In her prior role as Chief of Research at Kantar Worldpanel ComTech, she drove thought leadership research by marrying her deep understanding of global market dynamics with the wealth of data coming from ComTech’s longitudinal studies on smartphones and tablets. Prior to her ComTech role, Carolina spent 14 years at Gartner, most recently as their Consumer Devices Research VP and Agenda Manager. In this role, she led the forecast and market share teams on smartphones, tablets, and PCs. She spent most of her time advising clients from VC firms, to technology providers, to traditional enterprise clients. Carolina is often quoted as an industry expert and commentator in publications such as The Financial Times, Bloomberg, The New York Times and The Wall Street Journal. She regularly appears on BBC, Bloomberg TV, Fox, NBC News and other networks. Her Twitter account was recently listed in the “101 accounts to follow to make Twitter more interesting” by Wired Italy.

2 thoughts on “News You might have missed: Week of April 13, 2018”

Leave a Reply

Your email address will not be published. Required fields are marked *