Apple Could Launch Lower Priced HomePod

With Apple Inc.’s (AAPL) HomePod voice-activated smart speaker failing to take off, the company could be gearing up to launch a cheaper version that would be sold through its Beats brand.

Citing Sina, the Chinese Website, CNET reported that the smart speaker could be priced at $200, $150 lower than the current HomePod that goes for $350. While rumors have been circulating for some time that the Cupertino, California-based iPhone maker would roll out a cheaper version of its high-end speaker with Siri built-in, marketing it under the Beats brand is a new development and could enable it to rollout speakers that have different colors and designs, reported CNET.

Apple Could Use Cheaper Components

The report noted that Apple is partnering with Mediatek to make the lower end devices which will use cheaper components than the first iteration of the HomePod. Mediatek is one of the companies Amazon.com Inc. (AMZN) uses for parts for its Echo line of smart speakers that has its voice-activated digital assistant Alexa built-in. By going with Beats, Apple will also be able to roll out a lower-end speaker without hurting its high-end one. (See more:  Bernstein: One Time Items Pushed Apple Services.)

While the smart speaker market is heating up, Apple has been struggling in part because of the HomePod’s price point. It sells for about $200 more than Amazon’s Echo line of devices and is priced higher than Alphabet’s (GOOG ) Google Home Assistant.  For Apple, the HomePod was expected to be the path into the smart home market. Many thought the speaker would act as the hub for new voice-activated and Internet-ready devices. Internally, however, the company viewed it more as a high-end speaker, focusing on sound quality rather than Siri's capabilities. People who worked on the device at Apple told Bloomberg the company never viewed the HomePod as more than an accessory even as the Echo device grew in popularity. (See more: Amazon Rivals Catching Up In Smart Speaker Battle.)

HomePod Fails To Take Off

In recent weeks, reports have been surfacing that Apple has been forced to slash sales forecasts and reduce orders because of lackluster sales of the smart speaker. Bloomberg reported in April that Apple reduced the orders it placed with Inventec, one of the smart speaker's manufacturers and has been lowering its internal sales forecasts. Market data firm Slice Intelligence told Bloomberg pre-orders for the HomePod were strong in late January, accounting for roughly one-third of the smart speaker unit sales in the U.S. Once the HomePod arrived on store shelves, sales started to decline.