Amazon soars, Alphabet & Apple falter – Are earnings an indication of Alexa’s momentum?

Apple HomePod ships Feb 9, 2018
Apple's HomePod smart speaker begins shipping next month. But it faces fierce competition from established, and cheaper, incumbents in Amazon (Echo) and Google (Google Home).

“Alexa, take a victory lap.”

Amazon stock (NASDAQ: AMZN) soared today in after-hours trading thanks to Q4 results that blew away expectations. Short of it: $60B revenue; $2.1B operating income. For a company as big as Amazon — it’s hard to fathom.

Meanwhile, Google’s parent company Alphabet (NASDAQ: GOOGL) missed its guidance for the quarter and is taking a small haircut after hours, as well as Apple (NASDAQ: AAPL) who is facing year-over-year declines of iPhone shipments (77.3 million during the holiday quarter), and failed to ship a smart speaker during the critical holiday shopping season.

So, is it too early to blame Apple’s stock hit on the delayed HomePod?

Probably.

And, obviously, there’s a lot more to the numbers than just a smart speaker. Guidance, for instance, is soft.

I still can’t help but think, however, the December shipping miss by Apple and the much hyped HomePod speaker — a key component of the battle for the smart home — gave Amazon even more momentum with its Echo line-up than it already had. And that was already sizable to say the least.

CEO Jeff Bezos even gave a mention of that magical word on the call, saying, “Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often — expect us to double down.”

Oh, man. Amazon is going to double down on Alexa. That’s after releasing several well-reviewed Echo devices over the past year including a few new models with built-in screens (Echo Show, Echo Spot) in addition to leading at the entry level with the fast selling $49 Echo Dot.

Apple will finally start shipping the HomePod next month. Given the current leads that Amazon and Google (who is a strong #2 thanks to a smart speaker lineup that includes three versions of the Google Home) already have in this billion dollar market segment, you’d have to wonder, if slightly, if this kind of monster lead would have ever been ceded under Steve Jobs.

To make matters worse for Cupertino, iPhone revenue today missed. Not much surprise. We’ve all been reading about sluggish iPhone X sales and the potential for an early cancellation, followed by a trio of replacement models. Here’s hoping pricing starts at a more palatable level this time around. It’s worth noting that Cook said iPhone sales achieved the highest quarterly revenue ever, and that, according to Canalys, the iPhone X is the best selling smartphone in the world. Multiple sides to multiple story-lines.

Yes, it’s overly simplistic to suggest that Apple missed, and Amazon beat simply because of the delay of the HomePod.

iPhone sales — or lack thereof — have a lot to do with earnings of course so it’s clearly a concern.

But you have to wonder how much revenue Apple left on the table this holiday season because it didn’t have an answer to Amazon Echo and Google Home. Not only did it miss a month’s worth of potential sales, it missed retaining customers and/or winning new ones to the Apple platform. That might be the biggest challenge yet: winning over consumers who have already bought several Echos and Homes and are perfectly content to let a $349 HomePod sit prettily on store shelves.

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