Analysis: Why Spotify’s ‘Car Thing’ Is Dedicated to the Graveyard of Hardware

LOS ANGELES / STOCKHOLM, July 27 (Reuters) – Spotify Technology SA (SPOT.N) Car Thing player is now a thing of the past.

The world’s leading audio streaming service announced Wednesday that it will stop powering the device just five months after it was made available to all users in the United States. Read more By doing so, Spotify has become the latest software technology company to falter in an effort to build hardware.

Spotify made a $31 million investment in the device, which was aimed at increasing the number of users who listen to music or podcasts while in the car. However, the company said it was unable to sell enough devices at a price high enough to justify the investment.

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«We can’t come up with an attractive economic picture,» Spotify CEO Daniel Eck told Reuters. «So we decided to end this program in light of that.»

The Car Thing was a next-generation stereo device designed to stream Spotify music and podcasts from a user’s phone via a car audio system. After revealing the trials in May 2019, Spotify tested the device with a small group of people in April 2021, then showed it more widely in February of this year.

Spotify was not the first software company to seek to expand its relationship with users in the physical world through hardware.

Alphabet Corporation (GOOGL.O) Google was one of the first software companies to go into hardware trials with some major failures, including Google Glass – a wearable Android device that looks like glasses, which display information in a user’s field of view.

Snap Inc (SNAP.N) It discontinued the original Spectacles, a $130 sunglasses that streamed video directly to the SnapChat app, in 2017. It announced a new type of Spectacles last year, featuring augmented reality.

Meta Platforms Inc’s (META.O) Facebook plans to stop producing the consumer version of the video conferencing device called the Portal, instead focusing on the business market. She also disappointed people with her phone, which was released in 2013 in partnership with HTC. It was launched to mixed reviews, with critics raising privacy concerns.

Frank Gillett, IDC’s vice president of research, said he couldn’t recall any content company making a successful transition to hardware.

By contrast, a hardware maker like Apple Inc (AAPL.O) It was able to launch music and video services by building on its own operating system and the device’s existing relationship with consumers.

“When they made the iPod, they had people in the ecosystem,” Gillett said, adding that launching a device without such infrastructure was “a huge challenge.”

While Spotify rules the music streaming niche, building a device for the car has put it in a competitive arena with the likes of Apple CarPlay and Android Auto — both of which have the support of their respective ecosystems of billions.

Spotify said its devices were not designed to challenge these entertainment systems, but rather to provide an easier way for its users – especially those with older model cars – to listen to music or podcasts.

However, the Car Thing lacked other infotainment features, from navigation to making calls, making it hard to justify the need for a device just for music. It also required free listeners to upgrade to the premium subscription.

Spotify chief financial officer Paul Vogel told investors Wednesday that in addition to pricing challenges, inflation has driven up component costs and made chip shortages difficult to obtain parts.

Veteran consumer electronics analyst Tim Bajarin of Creative Strategies said consumers are reluctant to add devices to their cars when 98% of new cars in the US come with Apple CarPlay already installed.

«I remember thinking: ‘This is dead in the water,'» said Bajarin.

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Additional reporting by Dawn Chmilewski in Los Angeles and Subanta Mukherjee in Stockholm Editing by Matthew Lewis

Our criteria: Thomson Reuters Trust Principles.

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