What is Apple (AAPL) about to encounter as it launches its HomePod smart speaker in China? China’s smart speaker market seems to present both opportunities and challenges for Apple.
The opportunities include Chinese consumers’ strong appetite for smart speakers. According to data from eMarketer, there will be 34.2 million smart speaker users in China by the end of 2018 compared to just 3.5 million smart speakers in the country at the end of 2017. The data show that China’s smart speaker market is poised to expand 885% in 2018. And that’s not all—China’s smart speaker market is forecast to continue with its healthy growth in the coming years.
Apple’s technological prowess could also give it an edge in China’s smart speaker market compared to other international companies that may want to expand in the country. According to a Bloomberg report, Apple’s Siri digital assistant supports both Mandarin and Cantonese, the most prevalent languages in China. Amazon’s (AMZN) Alexa and Google’s (GOOGL) Google Assistant don’t currently support these languages. Siri is the technology that underpins Apple’s HomePod smart speaker.
Cutthroat smart speaker competition
In China, Apple is about to enter a smart speaker market mostly defined by fierce competition and in which price wars have become the order of the day. While the HomePod will cost 2,799 Chinese yuan (~$400) in China, companies such as Baidu (BIDU) and Alibaba (BABA) sell heavily discounted smart speakers in China, including devices that retail for as little as $15.
Additionally, Apple is poised to launch the HomePod in China at a time when it’s struggling to grow its hardware market share in the country. According to recent data from Counterpoint, Apple’s share of the smartphone market in China fell to 9.0% in the third quarter from 10% a year earlier.