The Over/Under On Apple’s Ecosystem


If the Amazon Echo is white wine and Google Home is red, then Apple’s new Siri-voiced HomePod is a fine champagne: fine-tuned, exclusive and priced to match.

Fine-tuned, because Apple has been touting the superior audio quality of its large, proprietary woofer (for deep, clean bass), its seven beam-forming tweeters (for pure high frequencies) and even the spatial intelligence to detect its position in a room and adjust audio output accordingly.

Exclusive, because the key selling point in the fall advertising cycle will be privacy. Apple has made a big deal of how it plans to use customer data — and more importantly, how it doesn’t. Apple has taken a stance against digital tracking and has no intentions of commercializing consumer data.

This, they say, sets the Apple HomePod apart from the Amazon Echo and Google Home, which some have called invasive or even creepy. The devices have 24/7 access to ambient audio in the home and can sometimes turn on without prompting. Echo recordings have been subpoenaed during murder investigations.

Finally, the price point: At $350, the sparkly Apple HomePod makes the $40 Echo Dot look like boxed wine by comparison.

So, is the HomePod worth the extra $310? Not if you ask PYMNTS’ CEO Karen Webster.

“Apple, with HomePod, seems to be about selling premium-priced hardware and hoping that there are enough consumers with discerning ears and big checkbooks who will prioritize sound quality over everything else, including access to a voice-activated, smart, personal assistant — and one that can be asked to play music from their Spotify playlists,” Webster said. 

Even the consumers with discerning ears and big checkbooks have their doubts. The Verge’s Nilay Patel admitted to spending thousands of dollars on stereo equipment but doubted others would want to make the same investment. Plus, he said, the move just doesn’t make sense coming from Apple.

“Apple built an empire with iTunes, selling low-bitrate audio files to play over cheap white headphones,” Patel said. “And everyone loved it! Now saying, ‘We’re going to sell you a more expensive speaker because it sounds better’ — it doesn’t line up with their history.”

Furthermore, users are not terribly impressed with Apple’s virtual assistant Siri when compared to competitors Alexa and the Google Assistant. Siri’s voice recognition capabilities often leave a bit to be desired, but Apple is banking on the fact that she’s already in customers’ pockets — even if they don’t like or use Siri to do their personal assistant bidding.

In contrast, Google has to convince consumers to buy their devices, and Amazon does too, but the latter seems like less of a hard sell — some 10 million consumers already own an Amazon Alexa, and 14 million are set to be sold this year. Amazon will seem to have no trouble getting consumers to access her from that Amazon app on their mobile device, since, well, they do that routinely. Amazon is making mincemeat of retail precisely because they do.

What Apple seems to have missed is that people haven’t taken to Alexa because she plays music, even though more than 80 percent of her owners ask her to. They like her because she’s a capable, friendly, many-skilled virtual assistant who helps them shop, cook, dress for the weather, check the news and listen to music. From any streaming source. 

The HomePod is a HomeBody. Its focus is supposedly on music, but it forces users to rebuild playlists they’ve already made on other platforms just so they can listen at home. When they go out, they can’t even take their re-constructed playlists with them.

“Alexa, on the other hand, is about building a platform and a voice-activated ecosystem capable of powering commerce,” Webster said. “It’s attracting consumers into that ecosystem with a variety of lower price point devices and 12,000 skills that a robust developer ecosystem has created for those consumers to discover and use.”

iPad Pro 10.5

Critics were equally underwhelmed with the new iPad Pro, which was Apple’s latest attempt to review iPad sales — which have been in decline since 2014. Sure, it’s bigger and better, with a brighter screen, faster processor, sharper cameras and support for the Apple Pencil or a connected keyboard. Plus some extra speakers. Basically, it was designed to be a laptop replacement. But can it actually replace a full computer?

Apple CEO Timothy Cook said, upon unveiling the original iPad Pro last year, that people were going to try it and “conclude that they no longer need to use anything else, other than their phones.”

For the sake of shoppers’ wallets, let’s hope not: The new iPad Pro costs more than most computers. The base model is $649. For the 512 gigabytes of storage and LTE capability, shoppers are looking at $1,079. Oh, and that Apple Pencil and smart keyboard? Sold separately.

Apple is overdue for a hit. Webster noted, “Apple makes more than 60 percent of its sales and its profits from selling hardware and has trained its investors to expect a steady stream of innovative devices every couple of years to feed the earnings beast.”

The new iPad Pro doesn’t seem poised to become that hit. The general consensus among critics seems to be that either buyers are planning to use the tablet as their main computer, or they just have money to burn since most of the goodies that come with the new iPad come along with the OS upgrade, making wholesale replacement an even harder sell. 

P2P Payments

Apple may believe that it could see more success with its new peer-to-peer (P2P) payments capability, announced Monday, June 5. I-Phone users are already texting each other payments via third-party apps like Venmo and Square, but now, Apple has integrated the skill into iMessage itself, which could have the potential to push out those third-party apps. That’s the hope, anyway.

Received payments will be stored on the user’s Apple Pay virtual card in the Wallet App and can then be transferred to a bank account, used at retailers and eTailers who accept Apple Pay — or even used at physical stores that offer tap-and-pay transactions, if users opt to store those payments on the Apple Pay Cash digital debit card.

It may be that Apple hopes to see P2P capability boost adoption of Apple Pay, which has been slow to gain traction since it was launched three years ago. It sees particular potential for Apple Pay Cash among younger users who don’t yet have their own credit or debit cards.

But, as Webster noted, the odds of that happening are probably not very high. “Just about every software play that Apple has introduced independent of the App Store and iTunes has sputtered — iBooks, Apple News, Apple Music and Apple Pay,” said Webster.

The company may run into the same wall it’s run into many times before, and that is its closed ecosystem. Pay P2P users will only be able to send funds to other iPhone users. Splitting a dinner bill with Android users? Better open Venmo.



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