Are consumers losing interest in
In a research note on Monday, TFI Asset Management analyst Ming-Chi Kuo predicts that shipments of Apple AirPods (ticker: AAPL) will decline in 2021, due in part to increasing competition in the wireless stereo audio market. He states that while the market is still growing, the focus is shifting to cheaper alternatives.
Kuo cut his AirPods shipping forecast for 2021 by 30% to 35%, to 75 million to 80 million units, which, according to him, would be reduced by 10% to 15% from 2020. He writes that the Wall Street analyst consensus for this year is 110 million to 120 million units this year, which would represent an increase from 25% to 30%.
Kuo writes that his research finds that Apple AirPods shipments in the first three quarters of 2021 will decline about 25% year-over-year. Even better-than-expected demand for AirPods 3, which it expects to go into mass production in the third quarter, won’t do any better than keeping calendar quarter sales unchanged year-over-year. It also reports that shipments of the AirPods Max line of headphones have been modest, projecting shipments this year of around 1 million units.
Kuo says that the TWS market, an acronym for True Wireless Stereo, grew about 45% year-over-year in the fourth quarter of 2020, but that AirPods market share fell to 30%, from about 40% a year earlier. . Reports that sales of low-end wireless audio products are growing rapidly; says more than half of the top 10 best-selling TWS products are priced below $ 50, compared to $ 159 for the cheapest AirPods.
Kuo says the initial success of AirPods was tied to easy Bluetooth connectivity and high quality. He says that Apple maintains the upper hand on both elements, but that the competition is catching up and cutting prices. He notes, for example, that while the AirPods Pro offers active noise cancellation and other improved features compared to other AirPods, the higher price (it’s $ 249) is silencing consumer interest.
“The competitive advantage of Apple products lies in providing integration of the hardware, software and ecosystem of services, not just hardware,” Kuo writes. “Siri is the core of the AirPods software and services ecosystem, but since Siri’s competitive advantage is not significant, the gap between the leading edge of AirPods and that of its competitors is narrowing due to the lack of custom ecosystem protection. that competitors gradually improve their user experience. and launch lower price strategies at the same time. We believe that the HomePod and HomePod mini shipments were significantly lower than expected for the same reason. “
Shares of Apple on Monday rose 1.7% to $ 123.11.
Write to Eric J. Savitz at [email protected]