Apple is building a Siri 'smart speaker' to outdo Google, Amazon

• Siri 'smart speaker' enters overseas production
• Device may debut next week but won't ship later in 2017
• Company seeks differentiation through surround sound, Apple Music

Apple 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 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's Echo and Google's 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.

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 and Facebook 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.

Inventec, 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.

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.