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Editorial

Channel checks, sales data on HomePod likely as wrong as it was about Apple Watch in 2015

Without actually presenting any hard data on sales, a new report has claimed Apple's HomePod sales are "weak," based on supply channel checks and data from Slice Intelligence--the same two sources that were used to suggest Apple Watch sales were "collapsing" three years ago.


Slice: Amazon's $50 Echo Dot outsold $350 HomePod


Sources unfamiliar with what matters



The report, issued by Bloomberg, was short on facts but claimed inside knowledge of HomePod based on "sources familiar with the matter," the same authority the site used to erroneously claim just last month that Apple's new 2018 iPad would be significantly cheaper in order to directly compete with Chromebooks on price.

That turned out to be false. Instead, Apple enhanced its existing iPad at the same price (and effectively raised its price by pairing it with the $99 Pencil), with little more than a ten percent education discount that didn't really lower the overall cost.

Rather than competing on price, Apple instead focused on iPad's vast library of creative learning apps (in contrast to the "web-based" software available for Google's ChromeOS netbooks) and its own faster, more powerful hardware supporting drawing, easy video production and Augmented Reality.

Bloomberg "sources familiar with the matter" were anything but familiar with any details that mattered.

False stories written in advance of reality



It's not clear if the unsubstantiated Bloomberg discussion on channel checks is accurate or not, but even real data from Apple's suppliers can't accurately predict inventory levels or retail sales without extensive knowledge of Apple's supply ramp, inventory build and the complex supply relationships between various parallel partners.

While Bloomberg based its entire story on the idea that Apple ostensibly cut its HomePod orders from Inventec in late March, it was previously reported in January that Inventec was "working on a relatively small initial shipment of 1 million speakers," out of a total of 10-12 million expected to be produced in tandem with Foxconn, with orders expected to be split between the two firms.

Bloomberg didn't even mention that Inventec was only one of the two suppliers building HomePod. Yet an order cut from one of a pair of competing suppliers can mean any number of a variety of things. Similarly, the idea that "some [Apple Store] locations are selling fewer than 10 HomePods a day" is equally meaningless. "Even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business." —Tim Cook

Apple has repeatedly challenged analysts and reporters for sensationalizing rumors of channel checks and trying to extrapolate simplistic conclusions from rumors of channel data involving a specific vendor.

As Chief executive Tim Cook commented back in 2013, "I would suggest it's good to question the accuracy of any kind of rumor about build plans. And I'd also stress that even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business."

Even so, Bloomberg, the Wall Street Journal and most notoriously Japan's Nikkei have cited channel numbers to attack virtually every product Apple has released since then as possibly having "disappointing sales," based on limited understanding of channel check data.

Even sales chart-leading iPhones from the 5c to 6s to 7 to today's iPhone X--which sold so well it radically shifted Apple's overall Average Selling Price--are not immune to journalists crafting false narratives claiming that it maybe it's still possible to consider them a "disappointment" because what if Apple had potentially built another 40 million units in the March quarter?

Fool me twice, shame on media



In the summer of 2015, Slice Intelligence similarly issued a report implying that Apple Watch was performing poorly. Journalists jumped on the data to uncritically claim that "data" was showing that Apple Watch sales "plunged" and were "tanking," when in reality the new product was becoming the most successful smartwatch product by a vast margin and even challenging the Swiss Watch industry for consumer demand.

Slice Intelligence compiled its figures from "e-receipt" data it gleaned from a large group of consumers who volunteer to share their purchasing information. Slice obtains much of its consumer data from a shopping assistance iOS app.

The Slice app allows users to track their online orders, visualize their own spending habits and even get alerts when prices change, assisting users to ask for refunds. The apps has garnered enthusiastic reviews, with the prospect of obtaining refunds on previous purchases being a particularly popular feature.

At the time, Slice Intelligence detailed to AppleInsider that the company's data for Apple Watch, FitBit and other wearables in the report only includes online sales tracked through the firm's app, email-scanning and partner services; while Slice does include online sales from Amazon and other retailers, it did not include these in its store sales for the Apple Watch report.

That's clearly changed here in the HomePod data, because the only real competition HomePod has (when defined as a "smart speaker") is Amazon's online sales of Echo WiFi microphones, more than half of which (according to Slice data) are represented by the cheap Echo Dot, priced at around $50.


Apple's HomePod strategy is obviosly not aiming to achieve market share in low-priced devices


When Apple's market share is behind you, Watch out!



Comparing Apple's premium products to a wildly dissimilar device that's priced an order of magnitude lower is common among market data firms seeking to disparage the company with comparisons of "market share." It was done with Android tablets, with smartphones and of course Apple Watch.

IDC initially claimed Apple Watch "market share" was behind Fitbit's and 'about equal' with Xiaomi "fitness bands" that cost around $13, despite the fact that Apple launched with quarterly sales of around $1.44 billion while Fitbit was seeing revenues of around $390 million and Xiaomi had (at most) collected $77 million over the same period.

History is littered with companies that tried to achieve market share rather than sustainable profitability. China is currently a bloodbath of companies that tried to achieve volume phone sales rather than making premium products people aspire to own.

There's little talk about Xiaomi watch shipments much anymore. This year, IDC's Francisco Jeronimo noted in a tweet that "Apple shipped more Apple Watches in 4Q 2017 than the entire Swiss Watch Industry shipped watches," adding that "Apple is the biggest watchmaker in the world."

Apple's focus on HomePod as a way deliver rich sound (and selling Apple Music subscriptions)--rather than as a voice-first novelty--appears likely to play out similarly to its positioning of iPhone as a way to take the power of desktop software on the go (and sell apps and games) rather than being a low-priced feature phone, or Apple Watch as a way to keep up to date and track workouts (and sell fashionable bands) rather than just being a low-priced round canvas for ads.

But notably, Bloomberg has consistently been wrong in its portrayal of the future of the tech industry, from its cheerleading of Chromebooks that the enterprise soundly rejected, to bashing Apple Watch sales to its current assault on HomePod.