Apple Inc. AAPL is reportedly bringing HomePod, a smart speaker integrated with Siri and aimed at the home automation market, in February.

It has been a while since the product was unveiled at the Worldwide Developers’ Conference in June 2017.

Taiwan-based Inventec, one of the two component suppliers of the smart speaker, made the announcement.  Foxconn Technology Group is the other supplier.

Apple’s Entry into the Smart Speaker Market

Apple’s launch of HomePad will help it take on other smart speakers like Amazon’s AMZN Echo and Alphabet’s GOOGL Google Home launched more than three years and one year ago, respectively. HomePod has functions similar to Echo and Home.

Interestingly, it is also integrated with Apple Music. We believe Apple’s foray into the smart speaker market will help it gain more subscriptions for Apple Music, which has seen phenomenal growth with more than 30 million subscribers.

Additionally, HomePod will also support Siri, which has fallen behind in the race owing to Apple’s aversion to opening itself to third-party developers, according to analysts. With HomePod, Siri will be able to “serve as a home hub for controlling smart products, playing music, and more.”

Moreover, Apple is working on the music quality and expects this to be the differentiator compared with other home speakers available in the market. In fact, a few months back it was reported that Apple was working on integrating the next generation of HomePod with face ID technology.

According to ReportsnReports.com, the smart speaker market will witness a CAGR of 34.44% over a period from 2018 to 2023 to reach $11.79 billion by 2023.

According to a September report by Consumer Intelligence Research Partners, Amazon dominates the market with 15 million units sold, followed by Google Home with 5 million units sold.

However, HomePod suppliers believe its sales to surpass 10 million soon after initial release. Moreover, they expect Apple to become a leader in the smart speaker market if 20% of the world’s 100 million iPhone users purchase it.

Shares of Apple have gained 48.6% in the past year, slightly outperforming the industry’s 48.5% rally.

Is Pricing a Concern?

As with all Apple products, price point remains a concern. HomePod carries a price tag of $349, heftier than Echo and Google Home, which are priced at $179 and $129, respectively. Analysts observe that Apple is already late to the party and such a hefty price tag might prove to be an impediment.

Nonetheless, we note that Apple’s brand is something that gives it an edge over its competitors.

Apple commands a strong user base with exceptional brand loyalty. It is widely perceived that Apple users refuse to switch to any other platform that isn’t running on iOS.

Apple’s Services segment, which includes revenues from Internet Services, App store, Apple Music, AppleCare, Apple Pay, licensing and other services, is in top gear. With the launch of HomePod, we expect it to spell big opportunity for the company.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus | Apple Inc. Quote

Zacks Rank and Stock to Consider

Apple carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology sector is Broadcom Limited AVGO, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for Broadcom is projected to be 13.8%

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