Bloomberg report suggests that Apple has lowered sales forecasts and reduced orders for the HomePod. The report was based on data from Slice Intelligence indicating that sales were strong at launch but rapidly tailed off.

The headline number in the report did seem to support the contention that the HomePod is selling poorly.

Three weeks after the launch, weekly HomePod sales slipped to about 4 percent of the smart speaker category on average.

But that gives a rather misleading impression, for six reasons …

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First, HomePod is a much more expensive speaker than its rivals, and is only useful for a particular slice of the market: those who own an iPhone and either have an Apple Music subscription or have all their music in iTunes and subscribe to iTunes Match. It’s not reasonable to expect sales of a $350 speaker with a limited market to rival those of a $50 device aimed at the mass-market.

Second, Apple doesn’t care about sales numbers, it cares about profits. Apple appears to make a smaller margin on the HomePod than its rivals in percentage terms, but in cash terms it makes more.

HomePod revenues aren’t small. Apple may have a 4% market share, but Slice’s own numbers say that equates to a 19% share of the revenue. For a single, first-generation product, I don’t think that’s a particularly worrying number.

Third, Apple hasn’t yet unlocked the market for multiple purchases. As soon as it pushes the update to allow stereo pairing and multi-room support, I’m not going to be the only one buying at least one more.

Fourth, the speaker itself isn’t Apple’s only source of revenue here. While it’s possible to use HomePod with your iTunes music library, you get way more value from it with an Apple Music subscription. If you haven’t already subscribed, buying a HomePod is a strong incentive to do so. And if you already subscribe to Apple Music, buying a HomePod virtually guarantees that you will continue to hand over that monthly $10 fee.

Fifth, this is a first-generation product. There has already been speculation that Apple may create a HomePod mini and a HomePod max. As my colleague Bradley Chambers observed when we were discussing it, the first-generation iPod got very similarly mixed reviews.

Reviews said the iPod was too expensive. It had too small a niche market. It wasn’t as fully featured as rival products. Any of this sounding familiar?

The iPod wasn’t an overnight sensation – it was the evolution of the device over time that turned it into a must-have product. And it was, of course, the iPod that paved the way for the iPhone.

Finally, there’s the point I made last month: the winds are shifting in Apple’s favor. Most of the criticisms of HomePod have been that Siri lacks the abilities of rival smart speakers. That’s true, but the reason for this is because Apple prioritizes customer privacy. That was already looking smart last month, and since then the Facebook privacy scandal hasn’t been out of the news for a day. Consumers are going to be increasingly wary of companies who play fast-and-loose with their personal data.

So in Apple’s shoes, I wouldn’t be worried about what may be a modest start for HomePod. It’s still going to sell in the millions this year, and likely has a future measured in the tens of millions per year as the product line develops.

Do you think I’m right to be optimistic about HomePod’s future? Or do you think the pessimists are right? As always, please take our poll and share your thoughts in the comments.

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