The latest market intelligence data on the wireless in-ear headphone market showed that AirPods shipments grew 3% year-on-year in the first quarter of this year, but the fastest growth was seen in Beats products.
The technical term for the market in which AirPods compete is TWS (true wireless stereo), which is a rubbish name as really it refers to self-contained in-ear wireless headphones. This includes Beats Studio Buds, Beats Fit Pro, and Powerbeats Pro, but excludes Beats Flex, as anything with a neckband/external components is not self-contained …
Numbers-wise, of course, AirPods still rule. Of the 21.7M units Apple shipped, some 19.3M of them were AirPods, says Canalys – while just 2.4M were Beats products. But percentage wise, Beats saw impressive growth.
Samsung saw a similar pattern, albeit with less dramatic numbers.
Market leader Apple’s TWS shipments were up 14%. Apple’s AirPods line grew 3% to reach 19.3 million units, while Beats by Dre, Apple’s audio sub-brand, contributed more significant growth, increasing 553% to reach 2.4 million units. Beats’ strong performance was driven by the popularity of its Studio Buds and the recently launched Fit Pro.
The report notes that the big advantage of Apple having two different brands in this sector is that it can make a broader range of products to appeal to different people.
“Vendors are using audio names with strong brand equity in sound to expand their total addressable markets,” said Jason Low, Canalys Principal Analyst. “Unlike Apple’s AirPods and Samsung’s Galaxy Buds ranges, devices from sub-brands can depart from the vendors’ core design philosophy and develop their own unique styles and niches. Options for variety and personalization are vital in a market where design and feature homogenization are common.”
The most dramatic growth percentage-wise was achieved by Skullcandy and Edifier. However, most of that growth has been achieved in the bottom-feeding end of the market: the sub-$50 segment. The problem with that, as Canalys notes, is that it’s the budget products which are hardest hit in difficult times.
Galaxy Buds TWS line fell 13%, while shipments from its Harman subsidiary, JBL, grew 31%.
The firm believes that specialist markets are a safer bet for smaller companies.
Highly commoditized items, such as budget TWS devices, are likely to bear the brunt of rising costs and inflation. The uncertain global market outlook will hamper consumer confidence and weaken demand. On top of waning demand, a crowded entry-level segment, rising costs and supply constraints also add to vendors’ problems.
Apple analyst Ming-Chi Kuo last month said that Apple plans to transition AirPods wired charging from Lightning to USB-C, but we shouldn’t expect this until next year.
Vendors must now explore niches, such as TWS for mobile gaming, work and fitness use cases. These are key areas where vendors can create new sub-categories that only a few brands can own and make an impression in a crowded market. This strategy will bode well for the post-pandemic world, where users will continue extending their listening habits into their daily lives and hybrid working environments.
AirPods shipments are likely to continue to grow as Apple works on adding fitness functionality to later models.
Alongside the release of a USB-C iPhone [in 2023], Kuo reported today that Apple would also release new USB-C versions of its other products that currently charge via Lightning. This would include AirPods, the Magic Keyboard, Magic Trackpad, and Magic Mouse accessories for Mac, and the MagSafe Battery Pack accessory for iPhone.
