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Apple to Make its Foray Into Smart Speaker Market in China

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Apple (AAPL - Free Report) recently confirmed that its smart speaker, HomePod, will be available in China and Hong Kong from Jan 18. The device is priced at RMB 2,799 ($414) in China and HKD $2,799 ($357) in Hong Kong.

Although Apple is a late entrant in the smart speaker market, HomePod is gaining momentum on brand loyalty and expanding global footprint. Notably, the device is already available in UK, the United States, France, Canada, Germany, Spain, Mexico and Australia.

What Does China Entry Mean?

HomePod, which was earlier available only via third-party distributors, is expected to benefit from the rapidly growing Chinese smart speaker market. Per Canalys, China is the world’s second largest smart speaker market, shipping 5.8 million (29.4% of global shipment) smart speakers in third-quarter 2018.

Apple is also looking to push the usage of its music services on HomePod, as music was the most commonly used feature (70%) in smart speakers in 2018, per Adobe Analytics survey.

Notably, HomePod will support a variety of popular local music streaming apps including Tencent’s QQ Music, Dragonfly FM and DeDao in China and JOOX, Spotify (SPOT - Free Report) and KKBOX in Hong Kong.

Moreover, users will be able to stream songs from Apple Music’s New Artist of the Week program directly to the device. Some featured artists from China include Lucie Cheung, Lu Xianghui and Corsak among others.

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM) | Apple Inc. Quote

Can HomePod’s Features Give it an Advantage?

The iPhone maker is looking to carve a niche for itself in the smart speaker market in China as HomePod supports regional languages like Cantonese and Mandarin. Apple is ahead of its Chinese smart speaker counterparts as those support only Mandarin, per Variety.

Additionally, HomePod’s foray into China is likely to strengthen Apple’s competitive position against dominant players like Amazon’s (AMZN - Free Report) Echo and Alphabet’s (GOOGL - Free Report) Google Home devices in the global smart speaker space. Notably, Amazon Echo and Google Home devices are not available to users in China and do not support any of the local languages.

However, dominance of Xiaomi’s Mi AI Speaker, Alibaba’s    Tmall Genie and Baidu smart speakers in China are likely to keep Apple under pressure. Additionally, the ongoing trade dispute between the United States and China may further worsen things for the tech giant.

Nevertheless, international expansion coupled with increasing adoption of the smart speakers is expected to boost HomePod sales, which is a positive. Notably, the global smart speaker market is expected to reach $7 billion in 2019, up 63%, and $11.8 billion by 2023, per Deloitte’s report.

Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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