Apple’s Latest Event Reveals a Remarkable Truth About Why the iPhone Is No Longer Its Most Important Product

If you were paying attention, you probably know that Apple introduced the iPhone 12 yesterday. The biggest news was that the iPhone is finally getting 5G, though I’m not sure that was the most important thing Apple said yesterday. In fact, I’m not sure the iPhone is the most important thing Apple introduced yesterday.

Sure, the 5G version of the iPhone will probably spur a surge of upgrades among people looking for the latest-and-greatest. Never mind the effort the carriers will put into convincing all of us that 5G is the future of wireless. I mean, technically it is, but it’s still definitely the future–not something that changes anything this year. 

However, the iPhone 12 isn’t Apple’s most important product, at least not from a standpoint of where Apple has room to grow. To be fair, I think Apple nailed the iPhone 12, with maybe only a couple of exceptions. Also, yes, the iPhone is still a big deal. It’s still the largest driver of both revenue and profit for Apple. It’s also the reason Apple is worth $2 trillion and is the piece that holds the rest of its ecosystem together.

However, about that ecosystem. Apple also introduced a smart speaker called HomePod Mini, and I think I can make the argument that it’s far more important overall to where Apple is headed. This is a big deal because the home is the most important front for Apple and every other tech company at this point. And it’s not just because home is where most of us spend the majority of our time.

Apple has made it clear that its services division not only represents its greatest area of growth, it’s already a major profit center. The iPhone is the natural lead-in to that ecosystem, but smartphones are a mature product. There are very few new iPhone customers, relatively speaking, only upgrades. That means that the revenue Apple generates from the new iPhone is the baseline it expects from that business. 

The services division is different, and the HomePod is an important piece for these three reasons:

The HomePod Mini is the second product this year that Apple announced with its U1 chip (the first being the Apple Watch last month). The U1 is Apple’s ultra-wideband chip (UWB), which allows for precise location tracking. It means that the HomePod Mini can detect when another device with a U1, like an iPhone or Apple Watch, is close by. That allows for a lot of cool features like Handoff, which is Apple’s way of letting you switch your music from your iPhone to a HomePod just by bringing it close. 

It also means that the HomePod Mini can assist with the Find My app. Apple mentioned this capability briefly, but it’s a far bigger deal than the company indicated, especially if it plans to introduce a Tile-like location tag next year. The more devices with U1 chips, the more secure points of location tracking that can be used to find devices, while still protecting privacy.

The HomePod Mini also serves as a voice-controller for HomeKit, which is Apple’s smart home technology. I suspect that most people with smart light bulbs, for example, are using a Google Nest Mini or an Echo device to control them. HomeKit is mostly relegated to Apple loyalists, but that’s because it simply hasn’t been as accessible. If Apple wants its smart home ecosystem to take off, it needs a product for every home. That’s the HomePod Mini. 

Finally, the HomePod Mini, by virtue of being a relatively affordable alternative to an Echo or Nest Mini–at least compared to the original version–helps Apple keep its users safely inside its walled Garden. Every home with a HomePod Mini is one less that’s likely to scoop up Amazon Echo Dots at a deep discount on Prime Day. 

The original HomePod was a fantastic-sounding smart speaker. It was, in some ways, too fantastic for its own good. It was also overpriced, and few people ever really bought one. Compared to its competition, like Google’s brand new Nest Audio (which is $99), the HomePod never really had a chance to gain a foothold in people’s homes. The HomePod Mini, on the other hand, solves that problem with a product that is far more compelling to someone who is new to smart speakers.