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Apple’s AirPods shipments may be lower than consensus estimates, says MFI-Chi Kuo, an analyst at TFI Asset Management.
Josh Edelson / AFP via Getty Images
Lose consumer interest in
appeal
AirPods?
In a research note on Monday, Ming-Chi Kuo, analyst at TFI Asset Management, predicts that Apple (ticker: AAPL) will reduce AirPods shipments in 2021 – in part due to increasing competition in the wireless stereo audio market. He claims that while the market continues to grow, the focus shifts to cheaper alternatives.
Kuo has reduced its forecast for AirPods for 2021 by 30% to 35%, to 75 million to 80 million units, which he says would drop by 10% to 15% from 2020. He writes that the Wall Street analyst’s consensus for this year 110 is million to 120 million units this year, which would increase by 25% to 30%.
Kuo writes that his research finds that Apple AirPods shipments will be around 25% year-on-year during the first three quarters of 2021. Even a better-than-expected demand for AirPods 3, which he will expect in mass production in the third quarter, will do nothing better than keep sales of the calendar fourth quarter flat year on year. He also reports that shipping on the AirPods Max headphone line was modest, sending out about 1 million units this year.
Kuo says that the TWS market – an abbreviation for True Wireless Stereo – grew by about 45% in the fourth quarter of 2020, but that the AirPods market share fell to 30%, from about 40% a year before. He reports that sales of low-end audio products are growing rapidly – he says more than half of the top 10 TWS products sold are under $ 50, compared to $ 159 for the cheapest AirPods.
Kuo says the early success of AirPods was coupled with easy Bluetooth connectivity and high quality. He says Apple maintains the advantage on both elements, but that the competition is catching up and lowering prices. For example, he notes that while the AirPods Pro offers active noise cancellation and other enhanced features over other AirPods, the higher price (that’s $ 249) dampens the interest of consumers.
“The competitive advantage of Apple’s products lies in the integration of the hardware, software and service ecosystem, not just hardware,” Kuo writes. “Siri is at the heart of AirPods ‘software and service ecosystem, but because Siri’s competitive advantage is not significant, the gap between AirPods’ forefront and its competitors is narrowing due to a lack of ecosystem protection as competitors gradually improve their user experience. . and at the same time start lower pricing strategies. We believe that the mini-shipping of HomePod and HomePod was significantly lower than expected for the same reason. ”
Apple shares rose 1.7% Monday to $ 123.11.
Write to Eric J. Savitz at [email protected]