Apple Makes Another Play for the Home

Apple (NASDAQ: AAPL) has dabbled in the smart home for years without making much headway. HomeKit was supposed to be the center of the smart home, but has lagged tech stock competitors in the number of compatible products available and is still a little clunky to use and setup. HomePod was never the widely adopted smart speaker that Apple envisioned. And even Apple TV isn't a "must-have" for Apple users. Put them together and the company has simply had trouble building a cohesive strategy in the home.

HomePod Mini, which was introduced Tuesday along with the iPhone 12, could change Apple's fortunes in the home. It's simple to use, packed with features, and most importantly, it's cheap.

Family in a home with HomePod Mini on the table.

Image source: Apple.

Apple fixes the HomePod mistakes

When HomePod was introduced in 2018, it seemed like a logical product extension for Apple. The company was already big into music and Siri was integrated into iPhones, so a speaker was the next step. But the product started at $349, making it very expensive compared to Amazon (NASDAQ: AMZN) Echo and Alphabet (NASDAQ: GOOG) Home/Nest speakers.

HomePod Mini fixes that, costing just $99. And the form factor is much smaller than the original HomePod. The low cost and ability to set up rooms in the home make it a great full-home audio system, which would have been incredibly expensive with the original HomePod.

The other problem the HomePod Mini fixes is the integration with Apple's other devices. The benefit of using the Apple ecosystem is that products work together seamlessly. But there hasn't been much integration between new products like CarPlay, AirPods, Apple Watch, and the home. New capabilities with the HomePod Mini like the Intercom feature start tying all of these products together into a more cohesive ecosystem.

Will the HomePod Mini resonate with consumers?

Apple is once again leaning into what it feels differentiates itself from Amazon and Alphabet in the smart home. Security of Siri was highlighted during the HomePod Mini launch, and that's going to be a big selling point if you're someone who values the security of Apple products.

The real innovation of HomePod Mini could be its integration across Apple's ecosystem. The Intercom feature can be used between CarPlay to the home or even to AirPods. Being able to connect and communicate on that level could make hands-free communication easier within the ecosystem of devices connected to the network.

The key concept to think about long-term is "hands-free." I think we're starting to see the vision Apple has for connecting people, devices, and services with just the sound of our voice. If used to its fullest extent, HomePod Mini could control a home's temperature, lights, locks, garage door, music, as well as be a communication tool. What's missing is integration with Apple TV, where it could even replace the remote.

What I have to wonder is whether the features will be used as Apple intended. HomeKit was originally supposed to be a smart-home hub for everyone, and despite being included on hundreds of millions of iPhones, it's still not driving a smart-home revolution. If HomePod Mini with Siri can open that line of communication between users and Apple's home product, it could be a key connection point across the ecosystem of products.

Is HomePod Mini a game-changer?

I see HomePod Mini as an incremental step forward for Apple in building a connected ecosystem of devices that includes the home. But it's not the key to the ecosystem (that's the iPhone) or a revolutionary new gadget (AirPods), it's a tuck-in product that will be a nice luxury addition for some users. And with the security that Apple always includes in its products, this could be a device some users will welcome into their homes where Alexa and Google Assistant have been shut out.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Travis Hoium owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (C shares), Amazon, and Apple and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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