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Apple’s AirPods shipments could be lower than consensus estimates, says TFI Asset Management analyst Ming-Chi Kuo.
Josh Edelson / AFP via Getty Images
Consumers lose interest in
Apple
AirPods?
In a research note on Monday, TFI Asset Management analyst Ming-Chi Kuo predicts that Apple (ticker: AAPL) will decline AirPods shipments in 2021 – in part due to increasing competition in the wireless stereo audio market. He argues that while the market is still growing, the focus is shifting to cheaper alternatives.
Kuo lowered his AirPods shipping forecast for 2021 by 30% to 35%, to 75 million to 80 million units, which he says would be 10% to 15% by 2020. He writes that the Wall Street analyst consensus for this year is 110. million to 120 million units this year, which would be an increase from 25% to 30%.
Kuo writes that his research shows that Apple AirPods shipments will decline by about 25% year over year in the first three quarters of 2021. Even better-than-expected demand for AirPods 3, which he expects to go into mass production in the third quarter, will do no better than keeping calendar-fourth-quarter sales stable year over year. He also reports that shipments of the AirPods Max headphone line have been modest, with shipments expected to be around 1 million units this year.
Kuo says the TWS market – short for True Wireless Stereo – grew about 45% year over year in the fourth quarter of 2020, but AirPods’ market share fell to 30% from about 40% a year earlier. He reports that sales of low-cost wireless audio products are growing rapidly – he says more than half of the top ten TWS products sold are under $ 50, up from $ 159 for the cheapest AirPods.
Kuo says AirPods early success was down to easy Bluetooth connectivity and high quality. He says Apple retains the advantage on both elements, but competition is catching up and cutting prices. For example, he notes that while the AirPods Pro offers active noise cancellation and other enhanced features over other AirPods, the higher price (they’re $ 249) diminishes consumer interest.
“The competitive advantage of Apple’s products lies in providing integration of the hardware, software and service ecosystem, not just hardware,” Kuo writes. Siri is at the heart of the AirPods software and service ecosystem, but since Siri’s competitive advantage is insignificant, the gap between AirPods ‘lead and competitors’ is narrowed by a lack of ecosystem protection as competitors are gradually improving their user experience. while launching cheaper strategies. We believe that HomePod and HomePod mini shipments were significantly lower than expected for the same reason. “
Apple shares on Monday are up 1.7% to $ 123.11.
Write to Eric J. Savitz at [email protected]