Amazon's new Echo launch makes Apple's presence in the home more uncertain than ever

Monica Chin/Business Insider

Amazon Echo Studio

• Apple has always tried to differentiate its HomePod from other smart speakers by highlighting its audio quality.
• But Amazon's new Echo Studio is the latest sign that this is no longer enough to make Apple's HomePod stand out from the competition.
• Amazon also already dominates the smart speaker market, which could make it even more difficult for Apple to establish a meaningful presence in the market.
• Products like the HomePod and Apple Music are increasingly important for Apple as the company grapples with slowing iPhone sales.
• Visit Business Insider's homepage for more stories.

When Apple unveiled its Siri-enabled HomePod smart speaker in June 2017, it had a clear advantage over its rivals at the time: superior sound quality. Apple touted the speaker's ability to sense its location and adjust the audio accordingly as well features such as its in-house designed woofer as being key selling points.

That marked a departure from other internet-connected speakers at the time, which focused more on the intelligence of their virtual assistants and how many smart home products they could connect to over audio quality.

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But it didn't take long for competitors to catch on. Amazon launched two new Echos just a few months later in September, including the Echo Plus which offered improved 360-degree omni-directional audio compared to its predecessor and Dolby processing. Google also launched the Google Home Max days later in October, which the company positioned as being a high-end speaker boasting premium high-fidelity audio.

Read more: I spent a few minutes with Amazon's new Alexa smart ring, and it feels like it could be the first step toward something bigger

Apple's HomePod has lagged behind rival offerings from Amazon and Google in the years since its launch. And now, Amazon's new Echo Studio serves as yet another reminder that Apple needs to find new ways to differentiate the HomePod from its rivals, because high-quality audio doesn't seem to be enough.

The Echo Studio is a new smart speaker from Amazon that has five speakers for providing a range of frequencies, and like the HomePod can adapt its acoustics to fit the environment. The online retail giant announced the $200 Studio during its event on Wednesday alongside a slew of other products, including Alexa-enabled earbuds known as the Echo Buds and the Echo Glow smart lamp that works with Alexa.

If the Echo Studio's specifications and features alone aren't enough to convince you that it's a HomePod rival, just take a look at the two speakers side-by-side. The Echo Studio even resembles Apple's in some ways; it has the same wide shape as Apple's speaker, a distinct difference from the more familiar lean cylindrical shape of Amazon's previous Echoes.

Amazon doesn't necessarily need to outperform Apple when it comes to the smart home, because it's already in the lead. Amazon accounted for 25.4% of the worldwide smart speaker market in the second quarter of 2019, according to Canalys. Apple didn't even make it into the top five vendors mentioned in the report.

Read more: Amazon just announced the $130 Echo Buds, its big effort to move Alexa beyond the home. Here's what it's like to use them.

One could also argue that Apple doesn't need its HomePod to be a success. After all, the iPhone is by far its most profitable product. But Apple's iPhone sales have been falling in recent quarters as customers hold onto their phones for longer periods of time. Apple has been pointing to its wearables, home, and accessories product division - which the HomePod falls under - as being a key area of growth as iPhone revenue slumps. Boosting HomePod sales - and Apple Music subscriptions to go along with it - will only give Apple more to brag about on future earnings calls.

The HomePod may not be Apple's most important product. But Amazon's decision to launch an Echo that almost perfectly mirrors Apple's HomePod approach will only raise more questions and skepticism about the iPhone maker's smart home strategy. And the more Amazon and Google assert their dominance in the smart speaker space, the harder it will be for Apple to eventually stake its own claim in the market.