AirPods Pro Evidence of Apple’s Grander Vision for Wearables
Apple’s release of AirPods Pro signals the company’s grander ambitions for the AirPods family, beyond maintaining its position as the best-selling Bluetooth headset. AirPods Pro “transparency mode” adds to features like “Hey Siri” and “magic” device pairing to create a new kind of personal computing experience – a category we call hearables. Ultimately, we foresee AirPods adding wellness features including activity tracking and biomarkers as a logical extension into higher ASP AirPods.
- We estimate AirPods will account for 3% of Apple’s overall revenue in CY19, growing revenue at 86% y/y. We believe Apple has sold 75m AirPods since its release through the end of Sep-19. We expect Apple to sell 50m AirPods in CY19, up from 28.5m last year.
- Apple is finding new ways to generate revenue from customers between iPhone upgrades. The $249 price point should net Apple approximately $210 per sale after factoring in retail discounts. This is a 51% increase from the AirPods base model, which has a list price of $159 and a net price of $139. We assume the current $199 wireless charging model accounts for less than 5% of AirPod sales.
- We expect new colored AirPods sometime at the beginning of CY20. Consistent with the company’s well-honed strategy of adding color as a product feature. AirPods Pro in black or space gray is a no-brainer.