Today’s post is a special written by our EZPP Partner Manu Jindal, who is passionate about all things Startup & Tech.
When the airpods first launched, they were met with characteristic cynicism, one of which was a viral tweet that read “If only there was an invention that could keep those AirPods tethered together, like a string”. Since that tweet, the airpods have gone from strength to strength growing from 16mn airpods in ‘17 to 55mn in 2019. In 2020, they are expected to clock more than 100mm. In today’s post, we look at the dominant position of the airpods and what drove it and how the airpods provide both a new growth driver as well as a stronger Apple platform.
The rise and rise of the Airpods:
Thanks to the airpods, Apple now commands 60% of the wireless earphones worldwide. The ~$8 billion that airpods generated would make it among the top 400 companies in the world. With a launch less than three years ago, this meteoric rise in volumes is truly commendable. While the product in itself is, like most Apple products, extremely well built there are a few other factors that led to its growth.
The strength of the Apple Brand, and the network effects that the Apple ecosystem provide are definitely two of the strongest. Those combined with the rack space in Apple stores leading to good cross selling opportunities and the unintentional “scarcity effect” that it faced leading to running out of Airpods at a few stores during the holiday season made the airpods into the giant that it is today. With product revenue facing headwinds from declining smartphone sales numbers and pressure on pricing, the growth of the services and wearables segment has kept the firm’s growth going. Which brings us to the second part, how the airpods strengthen the apple platform.
Apple as a platform
As smartphone sales globally face volume growth and competitive pressure, it is only natural for Apple, a firm that still has around 50% of its revenue coming from iPhones to want to grow its product ecosystem further. The integrations between Apple’s traditional devices (The iPhone, Mac, iPad, etc.) is quite well known. Now it looks to integrate its wearables to strengthen its ecosystem further. Consider Airpods being connected to Apple Watch and able to make the call. Also this Watch can stream the music to your connected airpods. The intent is simple, increase customer stickiness making it increasingly difficult for them to leave the ecosystem.
The services piece, which is arguably the most valuable portion of the business right now, also both strengthens and draws from the share of the firm’s install base and ecosystem. Given its importance, we will be covering this separately in our future posts.
We hope you liked the piece. Please do let us know if there is anything else you would like us to work with on the Technology & Emerging business space.
Please do sign-up to get these straight in your email inbox! Sign-Up.
If you'd like these posts in your Whatsapp Inbox every morning, join our list: Whatsapp