Though I have yet to see any of the ad placements he writes about, this piece from John Voorhees in MacStories about Apple heavily promoting the Apple Music/Amazon Echo integration comes as little surprise. Voorhees believes that the motivation for Apple to strike this partnership with their sometimes rival in services may be to get their hardware back on Amazon’s virtual shelves. While I haven’t read any contradicting information about the deal, I believe there may be another reason entirely.
Ever since the arrival of the HomePod at the $350 price point, there has been speculation that Apple will eventually come out with a lower cost model to compete with Amazon and Google’s offerings. There seems to be consensus that Apple must achieve a lower price point to stand a chance of taking market share from their more entrenched rivals. M.G. Siegler even wondered if Apple might not be trying to compete with Amazon at all with their HomePod. I’m no tech pundit, but looking at the history of Apple reveals they don’t always offer a lower-cost alternative to compete in a given market. Despite all of the breathless commentary that they simply had to come out with a netbook, they never did. The Mac Mini was designed to be a low cost entry to the Mac world and even that is now more high-end that it’s humble beginnings ever suggested it would be. iPhone models keep getting more expensive. Look across Apple’s hardware line and you will find less entry-level options than perhaps they’ve ever had in the recent past.
Apple typically makes profits on margins from more expensive hardware. Amazon sells inexpensive hardware to move services and digital goods (look at the Kindle model). However, Apple Music is trying to be a Spotify competitor. They can’t do that with only a $350 smart speaker and a Sonos integration. They will lose. The barrier to entry for filling a room with music from Apple’s streaming service is too high. So do they dumb down their smart speaker? Why do that and lose the margins and the cultural cachet of having the best sounding smart speakers on the market? They can much more easily tap into the huge user base that Amazon has without having to adjust their hardware strategy.
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