KGI Securities speculated in a report yesterday that Apple would be unveiling a Siri-based, smart home product in order to take on Amazon's Echo. The analyst at KGI, Ming-Chi Kuo, stated that there is a greater than 50% chance that Apple will debut the device at their World Wide Developer Conference (WWDC), scheduled for June 5-9.
Kuo said that the device could launch in the second half of this year and would be priced at a higher point than the $179 per unit for the Amazon Echo. The device will be AirPlay enabled and performance will be derived from one woofer and seven tweeters which, according to Kuo, should provide "excellent acoustics performance." Kuo also is confident enough in his expectation that he says that Taiwan-based Inventec will be the exclusive supplier of the speakers to Apple.
Last year, The Information first revealed that Apple was planning a smart home device to compete with the Amazon Echo and this past September, Bloomberg reported that the device had entered the prototype testing stage.
Amazon's Echo has gained widespread acceptance, and Apple is late to the game. However, with its user base of well over a half-billion (and growing rapidly) strongly tied in to the Apple ecosystem, it's hard to not expect the Siri-based, smart home product from the company to grow into another big hit.
In a report this past December, Morgan Stanley estimated that Amazon had sold 11 million Echo units between mid-2015 (point of introduction) through December 1, 2016. According to their research, the vast majority of the units were sold here at home with about a million units across Europe in the same time frame. However, the firm's analysts also stated that their numbers were more than likely too low, given that they did not account for the sell-through that kicks off on Black Friday through the last weekend before Christmas in 2016.
Amazon said in a press release after Christmas 2016 that it had sold Echo devices by the “millions,” at a rate nine times greater than the previous year.
Post that press release, Morgan Stanley estimated that Amazon may have shipped 9 million devices in the holiday season alone.
Whatever the actual numbers that are out there, there is no denying the fact that the Echo is a runaway success, and if you have used the device, it's easy to see why it has been so successful.
However, I would imagine if Apple does unveil a competing device, most in the Apple ecosystem will make the switch in a heartbeat, given the fact that the company has introduced another product that ties in perfectly with the rest of the product offerings. In addition, I am sure that fact would hold true for a lot of the 500 million plus user base that Apple has across the world.
So, maybe Apple is late to the game. However, if they are indeed going to unveil an Echo-like device next month at WWDC, get ready for another hit product from Apple and from an investment point of view, get ready for Street estimates to move higher as well.
As the title suggests, from product and investment points of view, better late than never indeed.
Words to the wise.
(Long aapl, long and short options)
