Much of the focus on Apple (NASDAQ:AAPL) hardware over the past year has been the slowing of iPhone sales. That makes sense given the importance of iPhone revenue to the company’s bottom line and the impact it has on Apple stock.
But one of AAPL’s other big hardware success stories is only getting better. AirPods are now Apple’s second best-selling new product ever, and the company is on track to sell 40 million units in 2019 — up 90% from 2018. The company is determined to keep up the momentum amid growing competition, and despite releasing AirPods 2 only a month ago, is reportedly set to launch AirPods 3 later this year.
A trio of recent reports suggest the AirPods are making bank for Apple, and that the company is going all-out to ensure it stays on top. This is all good news for AAPL and investors who have been looking to services and wearables to help lift Apple stock.
Report One: AirPods Still Dominate Global True Wireless Earbud Market
At the end of March, Counterpoint Research released its report on the global true wireless earbud market for Q4 2018. According to Counterpoint’s data, AirPods commanded 60% of the overall market during the holiday quarter. The remaining 40% was made up of a wide range of audio brands, including companies like Bose, Samsung and Jabra.
It’s notable that Apple continued its dominance despite that fact that consumers were waiting for the followup AirPods 2 — which were finally released in March.
Report Two: AirPods Have Gone Viral
A second report came out earlier this year and makes the point that AirPods have “gone viral.” Above Avalon notes that there are an estimated 25 million people already wearing AirPods, and that Apple is on track to sell 40 million units this year (up 90% compared to 2018)— and that was before rumors of AirPods 3 began circulating! AirPods are already AAPL’s second-best-selling new product ever (after the iPad). At this point, they are outpacing Apple Watch sales by 40% at the same point in their release cycles.
Even more important (at least for AAPL investors), the Above Avalon report suggests that AirPods are demonstrating Apple’s competitive advantage with wearables — a hardware category that is expected to become increasingly important to the company.
Report 3: Apple to Release AirPods 3 in 2019
DigiTimes (via Mac Rumors) just released a report claiming Apple will launch the third generation of AirPods in 2019. The key new feature of AirPods 3 is expected to be noise-cancellation, an advantage that some AirPods competitors now offer. Other AirPod 3 upgrades could include improved water resistance and possibly a tweaked design.
Two generations of hardware within one calendar year seems like an extreme release pace for Apple. But the company is feeling pressure to keep AirPods on top. The competition in the true wireless earbuds market is already tough, but the devices have proved popular enough that other tech giants are now taking notice. Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) are both working on wireless earbuds, looking to leverage the hardware to give their personal voice assistants — Alexa and Cortana — a smartphone foothold.
Apple’s Big Fall Season
This fall is shaping up to be a huge one for AAPL, with big implications for the future performance of Apple stock. There will be new iPhones of course, and their success will continue to be critical for the company. But we’ll also see the push for Apple’s Services division to start doing more heavy lifting, with the launch of the Apple Arcade and Apple TV+ subscription services.
Wearables will also be the spotlight. The Apple Watch Series 5 is expected this fall. And if predictions are correct, Apple will be gunning for holiday shoppers with a new version of the most affordable, fastest selling and most iconic of its wearables — AirPods 3.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
