Apple is considering a low-cost HomePod, says KGI Securities

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• Apple may be preparing a less-expensive HomePod, according to KGI Securities analyst Ming-Chi Kuo.
• Apple's HomePod isn't selling very well among non-Apple fans, according to the analyst.
• Kuo said Apple's software quality is lagging behind its hardware quality.

Apple's smart speaker, HomePod, may not be selling as well as the market expects, according to research from KGI Securities analyst Ming-Chi Kuo.

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"We believe HomePod shipments could be far below market expectations," he wrote in a note on Friday seen by Business Insider.

He forecasts Apple to ship between 2 million and 2.5 million HomePods this year. Of that, about 1 to 1.5 million of those were sold in the first month, he wrote. That suggests a lot of HomePod sales this year went to dedicated Apple fans.

One silver lining is that Apple may be preparing a less expensive HomePod. "We believe Apple is mulling a low-price model of HomePod. However, even if a low-price version is commercialized, it will only provide a short-term boost," Kuo wrote.

It's also significant revision to the previous KGI HomePod sales estimate, which said Apple could ship between 10-12 million HomePods in its first year. Friday's note says the "market expects HomePod shipments to reach 5-10mn units" this year.

From the note:

We attribute potentially lackluster sales to: (1) an uninspiring user experience with the voice assistant function, Siri, compared to competitors; and (2) a high sales price, which could undermine demand despite excellent sound quality.

Bloomberg reported earlier this week that Apple had lowered its forecasts and cut orders for the device.

An estimate last summer said that Amazon had sold 10.7 million Alexa devices to that point, for comparison.

Some issues with HomePod, according to early reviewers, is that although the sound quality is good, Siri is frustrating to use, and the speaker only really works with Apple devices and Apple Music.

Kuo writes that Apple's software quality is lagging behind its hardware quality, which is a concerning sign for the company going forward.