(Bloomberg)—Apple Inc. is already in your pocket, on your desk and underneath your television. Soon, a device embossed with “Designed by Apple in California” may be on your nightstand or kitchen counter as well.
The iPhone-maker has started manufacturing a long-in-the-works Siri-controlled smart speaker, according to people familiar with the matter. Apple, No. 2 in the Internet Retailer 2017 Top 500, could debut the speaker as soon as its annual developer conference in June, but the device will not be ready to ship until later in the year, the people said.
The device will differ from Amazon.com Inc.’s Echo and Alphabet Inc.’s Google Home speakers by offering virtual surround sound technology and deep integration with Apple’s product lineup, said the people, who requested anonymity to discuss products that aren’t yet public.
Introducing a speaker would serve two main purposes: providing a hub to automate appliances and lights via Apple’s HomeKit system, and establishing a bulwark inside the home to lock customers more tightly into Apple’s network of services. That would help combat the competitive threat from Google’s and Amazon’s connected speakers: the Home and Echo mostly don’t support services from Apple. Without compatible hardware, users may be more likely to opt for the Echo or Home, and therefore use streaming music offerings such as Spotify, Amazon Prime Music or Google Play rather than Apple Music.
“This will be a platform for developing Apple’s services,” says Gene Munster, a co-founder of Loup Ventures and former Apple analyst.
Apple spokeswoman Trudy Muller declined to comment.
CEO Tim Cook has emphasized Apple’s services businesses over the past 18 months as iPhone sales slowed. He expects service revenue to double by 2020 from last year’s $24 billion. A speaker may help keep customers loyal to service products such as Apple Music, a subscription music streaming offering that costs $10 per month. The speaker would likely be tucked into Apple’s “Other Products” category, which currently includes devices like the Apple Watch, Apple TV and AirPods. That set of products generated $11 billion in sales last year.
Inventec Corp., the Taipei manufacturer that already makes the AirPod wireless headphones, will add the speaker to its Apple repertoire, the people said. Apple employees have been secretly testing the device in their homes for several months, they said. The Siri speaker reached an advanced prototype stage late last year, Bloomberg News reported at the time. An Inventec representative didn’t respond to a request for comment outside normal business hours in Taiwan.
This year’s developers conference will be the first since 2013 to introduce new hardware. Apple could announce updated iPad tablets at the conference, one of the people said. Apple last updated the 9.7-inch iPad Pro in March 2016 and hasn’t refreshed the larger 12.9-inch model since its November 2015 debut. Planned Mac updates will include refreshed versions of the MacBook and MacBook Pro with faster Intel Corp. processors, Bloomberg News reported earlier this month.
Apple hopes that more advanced acoustics technology will give the speaker an edge over competitors, according to people with knowledge of the product’s development. Along with generating virtual surround sound, the speakers being tested are louder and reproduce sound more crisply than rival offerings, the people said. Apple has also considered including sensors that measure a room’s acoustics and automatically adjust audio levels during use, one of the people said.
Apple will also likely let third-party services build products for the speaker. Last year, Apple opened up Siri on the iPhone to the likes of Uber Technologies Inc. and Facebook Inc., allowing a user to order a ride or send a WhatsApp message with a voice command.
The device will be a hub for Apple’s HomeKit home automation system, letting users control devices such as lights, door locks and window blinds. At present, an Apple TV or iPad is required to control that equipment from outside the home or automatically. The Echo and Google Home both support third-party services and smart home appliances.
Ahead of Apple’s launch, the competition has upgraded their speakers with support for making voice calls, while Amazon’s gained a touchscreen. Apple’s speaker won’t include such a screen, according to people who have seen the product.
An Apple-designed speaker with high-end sound quality that fits perfectly into the Apple ecosystem is a familiar pitch. In 2006, Apple unveiled the iPod Hi-Fi, a battery powered speaker designed to cast a shadow over the thriving iPod third-party accessory market. With its bulky size and high price point, the Hi-Fi flopped and was discontinued within 18 months of launching. With Siri and a clear hole in its ecosystem, Apple is banking that its second try at a speaker product will do better.