Bloomberg is citing research from Counterpoint Research that Apple’s AirPods stronghold on the True Wireless (TWS) headphone market is slipping. True Wireless describes headphones with no connection between the left and right side, or to a device such as a phone or laptop. With an expected 89 million AirPods to be sold this year, the projection is Apple will have 35% unit market share in this category. No information was provided on the market share last year or the resulting negative delta.
Does it matter? First, we need to consider not only unit sales, but also revenue. Apple will sell 89M units this year, but their Average Selling Price (ASP) will be significantly higher compared to the competition. 89M units multiplied by a large number is a very large revenue number. Its a number that the competition could only dream of achieving.
Napkin Sketch Math: If Apple has an ASP of $200, and a low-priced competitor has an ASP for $50, that means the competitor needs to sell 4x the units to match the revenue. Finding 4x the number of customers can be very difficult, even at a much more attainable price point.
Additionally, Apple has been rumored to be breaking even or even losing a bit of money on AirPods. But being locked into the Apple ecosystem is much more valuable and margin-rich than what’s being left on the table with headphone sales. This isn’t to say that Apple can kick up their feet. The competition is getting better at a faster rate. There is word circulating that the AirPods portfolio will be expanding over the next year. 35% market share is nothing to sneeze at, especially when its 3.5x the #2 in Xiaomi 1Notorious for razor thin margins at a very low price. As shown above, both unit and revenue numbers must be tracked.
