Apple's Beats brand in April unveiled the Powerbeats Pro, a redesigned wire-free version of its popular fitness-oriented Powerbeats earbuds.
Gene Munster Predicts Apple Will Eventually Earn More From AirPods Than Apple Watch
Despite selling for $159, considerably less than the Apple Watch at between $269 and $1,499, longtime Apple analyst turned venture capitalist Gene Munster believes AirPods will be "bigger than the Apple Watch" over the next decade.
Munster predicts that AirPods will contribute "about the same amount of revenue" to Apple's pocket as the Apple Watch by the company's 2022 fiscal year. He also predicts that AirPods will have an average price of $200 by then, as the product shifts towards what he calls "augmented audio."
Apple reported $2.87 billion revenue from "Other Products" last quarter, a 31 percent increase from $2.18 billion in the year-ago quarter.
Early last month, Apple CEO Tim Cook said the response to AirPods has been "great," with the wireless earphones remaining hard to come by.
"Demand for AirPods significantly exceeds supply, and growth in Beats products has also been very strong," said Cook. "In fact, when we combine Apple Watch, AirPods, and Beats headphones, our revenues from wearable products in the last four quarters was the size of a Fortune 500 company."
Despite launching over six months ago, AirPods continue to have a 6-week shipping estimate for orders placed on Apple's website. Some third-party resellers have occasionally had them in stock with earlier delivery.
Apple analyst Neil Cybart recently said Apple is "underpricing" the Apple Watch and AirPods in an effort to bring new users into its ecosystem. He said this pricing strategy was "unimaginable" ten years ago, when Apple was often accused of pricing products artificially high—aka the so-called "Apple Tax."
Cybart said a strong case could have been made for Apple to price AirPods at $249, or even $299. By selling them for $159, he thinks Apple has "removed all available oxygen from the wireless headphone space," and forced other wireless headphone makers to cut their own prices in order to remain competitive.
AirPods have been well received by early adopters, achieving a 98 percent customer satisfaction rate in a recent survey conducted by Experian and market research firm Creative Strategies.
Munster predicts that AirPods will contribute "about the same amount of revenue" to Apple's pocket as the Apple Watch by the company's 2022 fiscal year. He also predicts that AirPods will have an average price of $200 by then, as the product shifts towards what he calls "augmented audio."
AirPods: Bigger Than Apple Watch. Over the next 10 years, we anticipate that AirPods will be bigger than the Apple Watch as the product evolves from simple wireless headphones to a wearable, augmented audio device. While both AirPods and Apple Watch should continue to grow, we see AirPods contributing about the same amount of revenue as Apple Watch by FY22. We expect the AirPods ASP to increase from $159 today to $200 in FY22 as the product shifts to augmented audio.Apple doesn't disclose AirPods or Apple Watch sales in its quarterly earnings results. Both products are instead grouped into its "Other Products" category, alongside sales of iPods, Apple TVs, Beats products, and accessories. Any revenue or sales numbers that circulate around are purely estimates.
Apple reported $2.87 billion revenue from "Other Products" last quarter, a 31 percent increase from $2.18 billion in the year-ago quarter.
Early last month, Apple CEO Tim Cook said the response to AirPods has been "great," with the wireless earphones remaining hard to come by.
"Demand for AirPods significantly exceeds supply, and growth in Beats products has also been very strong," said Cook. "In fact, when we combine Apple Watch, AirPods, and Beats headphones, our revenues from wearable products in the last four quarters was the size of a Fortune 500 company."
Despite launching over six months ago, AirPods continue to have a 6-week shipping estimate for orders placed on Apple's website. Some third-party resellers have occasionally had them in stock with earlier delivery.
Apple analyst Neil Cybart recently said Apple is "underpricing" the Apple Watch and AirPods in an effort to bring new users into its ecosystem. He said this pricing strategy was "unimaginable" ten years ago, when Apple was often accused of pricing products artificially high—aka the so-called "Apple Tax."
Cybart said a strong case could have been made for Apple to price AirPods at $249, or even $299. By selling them for $159, he thinks Apple has "removed all available oxygen from the wireless headphone space," and forced other wireless headphone makers to cut their own prices in order to remain competitive.
AirPods have been well received by early adopters, achieving a 98 percent customer satisfaction rate in a recent survey conducted by Experian and market research firm Creative Strategies.
Tags: Gene Munster, AirPods Guide
Buyer's Guide: Apple Watch (Caution), AirPods (Buy Now)
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27 months ago
Except for the large amount of people that can't wear them because of their uncomfortable design. If they eventually offer different designs, it could be huge.
Out of curiosity have you actually used the AirPods for any length of time?
I own a ton of headphones and I absolutely hate earbuds because they hurt my ears. Sitting next to me right now in my office are a pair of Seinnheiser open back w/amp, a pair of Master & Dynamics, a pair of Sony MDR-1000X (my airplane headphones), and a pair of Audio-Technica's w/amp. All over ear headphones because earbuds kill my ears.
But do you know what I use all day here at my office? The AirPods. Why? Because I can wear them all day long and not even notice they are in my ears.
Everyone has different ears. But i've found the AirPods to be the most comfortable headphones i've ever used. They can't beat any of the over ear headphones I have for pure audio quality, but they don't need to. For all day use while sitting at my desk, talking on my phone, etc. the comfort they provide me outweighs the audiophile audio quality of my other headphones that I own.
I still use my other headphones. I just can't wear them all day long like I can the AirPods. My ears would be numb. The AirPods I will literally forget they are in my ears while going about my daily routine at work.
27 months ago
Except for the large amount of people that can't wear them because of their uncomfortable design. If they eventually offer different designs, it could be huge.
27 months ago
Seriously how can I get a job doing what these analysts do? We predict the iPod Touch will come in 7 colors next year! Apple will almost definitely maybe probably not make an Apple Television like we've all been saying for the last 10 years! The new Apple Car will feature CarPlay! Ok now pay me $120,000 a year.
27 months ago
Interesting analysis there. I have to disagree however. I've yet to see a single person wearing them in London, and rush hour here isn't exactly deprived of people wearing headphones. The other issue they have to get around is you look like a t**t wearing them.
Interesting. I was recently in London for 4 days and saw at least 2 people with them.
And the aesthetics are simply opinion and habit. Why should a dangling string from the ears look better than 2 short white stubs? You are just not yet used to the latter.
27 months ago
I have AirPods and they are awesome. But to go against what Munster is saying, the AirPods have encouraged me more than anything else to get an Apple Watch. I've had/am having a tough time waiting for series 3 this fall, but I'll be one of the first to preorder.
27 months ago
Out of curiosity have you actually used the AirPods for any length of time?
I own a ton of headphones and I absolutely hate earbuds because they hurt my ears. Sitting next to me right now in my office are a pair of Seinnheiser open back w/amp, a pair of Master & Dynamics, a pair of Sony MDR-1000X (my airplane headphones), and a pair of Audio-Technica's w/amp. All over ear headphones because earbuds kill my ears.
But do you know what I use all day here at my office? The AirPods. Why? Because I can wear them all day long and not even notice they are in my ears.
Everyone has different ears. But i've found the AirPods to be the most comfortable headphones i've ever used. They can't beat any of the over ear headphones I have for pure audio quality, but they don't need to. For all day use while sitting at my desk, talking on my phone, etc. the comfort they provide me outweighs the audiophile audio quality of my other headphones that I own.
I still use my other headphones. I just can't wear them all day long like I can the AirPods. My ears would be numb. The AirPods I will literally forget they are in my ears while going about my daily routine at work.
Same here. Airpods are extremely comfortable that sometime I forget I'm wearing them. I wonder people say they don't fit are just trolling.
27 months ago
Makes sense as they are more general use and despite how much people enjoy their watches, they have a less universal use case.
27 months ago
He might be right. Every time I go into the Apple store it seems like there is a force field keeping people away from the two large Apple watch / bands tables. Rarely is there anyone there. Complete waste of store floor space IMO.
27 months ago
I would really have a hard time buying AirPods for $249 or $299. For that price they'd better be waterproof, noise cancelling, have an extremely long battery life, and sound twice as good as the AirPods do now. On the flip side, at that price they'd be more readily available.
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