Apple may be losing out on smartphone sales, but Airpods have become a rage

With the streaming market expected to grow to $15 billion by 2024, and the global hearable market to hit $24 billion by 2023, Apple has a lot of wiggle room to get out of the iPhone sales slump.

If one were to go by smartphone sales, this would be the third or the fourth time that industry watchers would be writing Apple off. The first ones to predict the demise of the company were those who thought that Apple won’t recover from Apple II. But the company was able to reinvent itself. The coming of laptops dealt another blow, but then there was the Macbook. As soon as people started thinking that iPod was dying and Apple will have no future, there was iPhone. Now, that there is talk that Apple has nothing to offer in terms of smartphone revolution besides the camera upgrades and convenient user interface, Apple is banking on its accessories and subscriptions to sail through.

The Airpods are the next big thing, and are selling more than Apple’s smartphone. While it is true, that lower price point will mean that it will take years for them to compensate for iPhone sales. But given the volumes, Apple is already making profits off these devices.

Sale of Airpods doubled to $6 billion last year, and is expected to touch $15 billion in 2020. The company is expected to sell 85 million Airpods this year, it sold 60 million last year.

Although analysts are claiming that the trend will soon peter out, but as technology keeps improving, hearables are going to occupy a larger market share. Also, there is a lot of innovation that is yet to happen in this space. A classic example of this is Here One.

Once touted as the next big thing in the hearable market, the company went bust in a few years, but did showcase technology that we are yet to see in any of the new devices. Although most earphones claim they have active noise cancellation, Here One was the first company to come out with different modes for noise cancellation.

Also, it had three mics in each earphone, which helped gather sounds from surroundings and process them as white noise. A person could only hear the piano in a concert, if they wished to and mute every other instrument. This selective hearing was also applicable to directional hearing. One could activate if they wanted to hear voices in front of them or on their side.

The only drawback of Here One was the battery, given the processing power that was required to handle three mics, the power would run out in 2.5-3 hours, and charging would take another few hours.

With companies still innovating to fit more in-ear and out-ear microphones in one pod, technology will only improve. And, as disposable incomes increase, replacement rate of earpods would be much higher than replacement of phones in the foreseeable future. People who cannot afford a $800 (`60,000) phone upgrade each year, would easily be able to swing $150-200 (Rs 12,000) every one or two years.

But the future for Apple may not be as rosy. Apple still commands value as a premium product, but this is the domain of the Boses and the Sonys. More important, Samsung is catching up. Galaxy Buds are cheaper and have longer battery life. They are not Apple yet, but technology is only a few acquisitions away. Apple acquired Beats in 2014.

Another property that has gone unnoticed is Apple Music. It may be losing the battle to Spotify, but the ecosystem has ensured that Apple keeps its loyalty base.

Apple Music hit a new high last year. The services garnered the company $12.5 billion in the last quarter of the year. Apple Music registered a 18% growth.

With the streaming market expected to grow to $15 billion by 2024, and the global hearable market to hit $24 billion by 2023, Apple has a lot of wiggle room to get out of the iPhone sales slump. Besides, the brand having its own loyal base means people would still keep buying its phones. Replacement time may increase, but with Apple products now costing more, the company will still rake in a premium. As long as Apple is innovating or acquiring it is not going anywhere, even if you see less iPhones.

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