The Airpods Disruption
A retrospect on the Airpods Journey and the current truly wireless segment
Apple, Bose, Samsung, Sony, Sennheiser, Skullcandy, Jabra, Bang and Olufsen, Jaybird, Motorola, Logitech, Huawei, Avanca, AIAIAI, Alesis, Amkette, ASUS, Audio Technica, Beyerdynamic, Creative Technology, Denon, Grado Labs, The House of Marley, JAYS, JVCKENWOOD, Molami, MONSTER CABLE PRODUCTS, Panasonic, Parrot, Philips, Pioneer, SMS Audio, Sol Republic, Turtle Beach, Urbanears, Westone Laboratories, Alphabet, Bragi, Nuheara, Alpha Audiotronics, Rowkin, Crazybaby, Meizu and Waverly Labs are some of the prominent names in the wireless headphones market.
Before late 2016, Airpods as a category did not really exist. The launch on December 13th 2016 created ripples in the wireless headphones market. Launch was followed by series of Gifs and Memes on the internet with the netizens being shocked by the design of Airpods.
It invented a category that was conventionally absent and now two years later we’re seeing the massive shift in the adoption of wireless headphones form factor. This mass-hysteria aided wide popularity for the so-called Airpod.
Airpods catered to the End User segment of Entertainment, Gaming and Sports/Fitness. Despite its wide base of critics, Airpods rolled. Rolled like a giant ball of fire on a Saturday evening as if carefree, almost reckless. Airpods was no more only for a selected few. The 160$ wireless earbuds reflected an identity more strongly than names, attire and accessories could.
This time, Apple indeed created a product which made it a first-mover and forced the competition to venture into the true wireless market. Which seemed like a joke to many, reported a 16 million unit sales globally in the first year itself(Statista). Soon after the launch, we saw a lot of Chinese brands selling almost the same sophistication at 1/4th of the Airpod price. It was soon followed by similar SKUs being launched in the product line by competition, namely Sony, Bose, Samsung, Sennheiser, Skullcandy, JBL and few other who found it necessary to follow the trend.
Regardless of the mocking, Airpods gained popularity amidst doubt. While 2019 is yet to complete, the Statista report suggests Airpods sales touching almost 50mn.
Disruption comes in many types and forms. Apple’s almost non-existent presence in the wireless headphone market before late 2016 now speaks to us about a form factor disruption. This time, Apple might have pulled off another Ipod. Though, Apple was far from the first company to sell a digital portable music player. Apple however can be attributed for the growth of the true wireless segment which shows in numbers as well.
In H1 2018, True wireless accounted for 12% of wireless headphones and is set to capture more than a third of this segment by 2022. Also in till 2018, Apple had approximately a 83% market share in the true wireless segment. (Audioxpress, 2018)
One can see competition stiffening up and competition trying hard to catch hold of a substantial chunk of the market share created by Apple, which could either be the Apple’s current share or the growing adoption of the true wireless form factor. Since the customer purchase cycle here is going to be short, with no way to repair those lithium-ion based earbuds battery, Apple not only has to make sure its AIDA model is successful, but has to monitor customer’s repurchase, i.e once the Action is over.
With the competition coming up with better noise cancellation, ambient noise capabilities, improved audio capabilities and other advanced features, this space is going to get intense. While the ASP of wireless headphones has been growing, market remains price sensitive, customers will choose value for every buck and Apple might have some tough time competing with the Audio Tech giants like Bose, Sennheiser and Sony.
Regardless of Airpod’s journey ahead, the success of Airpods speaks about continuous disruption. How, one would think, in an almost brand-saturated market like wireless headphones, Apple would create its own space and dominate the wireless headphones segment globally? Our reaction to it though in the beginning was abysmal, let alone the wide criticism of its design, Airpod struggled to convince buyers of its usefulness and potency.
The Airpod story tells us about the necessity of continuous disruption. While products and business strategies follow the process of iteration and innovation for continuous improvement, disruption would mean change in existing patterns, it would mean no competition and would sometimes even have capabilities to destroy competition.
It tells us how opportunities are out there in the business ecosystem, and a slight shift in approach could help brands develop lasting competencies. Apple not being a core audio brand and being able to disrupt the audio space could also mean existing brands are not well aware of their customer pulse, and probably the customers weren’t too.
Apple fought the critics bravely and managed to disrupt still. On the other hand, competition knew their customer can pay for a better audio experience. Having a knowledge repository and past years of experience, existing brands were quick to realize that this is a growing space and customers will pay for the product. Sony, Bose, Samsung and few others positioned their product in the 150$ to 250$ range with different capabilities and features.
While Apple will enjoy the first mover advantage for sometime, it suffered its share of humiliation as well. While we’re going to see a lot iterations of the product based on customer demand and response, Apple being the disrupter for the category is going to reap its share of profits for quite sometime until there’s some serious challenge to throw Apple out of the customer’s mind for the category. It is also a case study for brands to mine opportunities to innovate and disrupt systems, processes, products and business strategies.
