Apple (NASDAQ: AAPL) released its first smart speaker in early 2018. The device received ambiguous feedback – it was highly appreciated for its excellent sound quality, but may not have come up with the smart "part" of the smart speaker. "In addition, this is not a proposal that would compete for the price – its price was given by other popular smart-speaker offers.
Apple's strength allowed him to sell as many of these devices as it was. Recently, analysts from Strategy Analytics argued that HomePod captured a significant share of the total share of industry revenue (16%), as well as the market share of $ 200 plus smart -Spy (70%) in the second quarter of 201
Apple trying to stimulate demand for HomePod by giving Apple Music users $ 50 discounts on a device in the UK On April 4, 2019, Apple formally (and quietly) lowered the HomePod price by $ 50. That's what it means.
Maximization of income, profits
Setting pricing on a product is a complex act of balancing. If a company values a product too low, it can maximize the number of units it sells, but it can not maximize revenue or gross profit. If a company values a product too high, then the revenue from one device and gross margin may be rather high, but the company may leave a significant number of deliveries on the table, but again it is not able to maximize revenue and gross profits.
At an initial price point of $ 349, HomePod was one expensive smart speaker. This, combined with the fact that it was not just a home function and function, may have limited its attractiveness.
As mentioned above, Apple sold a lot of HomePod devices, and it would not be surprising if we had to find out that most of the device buyers over the past year were hardcore enthusiasts of Apple. However, a year after the initial launch, there are a number of factors to consider:
- The number of hardcore Apple enthusiasts who may be interested in HomePod, but have not yet bought, has dropped significantly.
- The costs of the Apple HomePod have probably dropped as they got the experience of installing devices. In other words, the speed of production is likely to improve, and the production costs of components within their production capacity have improved.
- Apple did not update the product for a year.
The first and third factors have probably led to a significant reduction in HomePod sales at an initial launch price, while the second factor should give Apple some flexibility to lower prices by enjoying the gross profitability of the device it saw when it first launched the devices. .
At the same time, it's not surprising that the company simply cut prices on HomePod. A lower price should make the device more attractive to a wider range of customers, and an increase in unit volume should, I hope, lead to more general income and gross profits than if the company continued to sell the device at a price of $ 349.