Airpods too light to fly Apple’s flag

If Apple drafted a “best of 2019” list of business units as it does for apps, AirPods would top the chart. While expensive TV shows and aggregated news services have had a cool reception, wireless earphones have become one of the company’s most successful new products.

Cyber Monday, the biggest day of online spending in the US, has given the ear-dangling headphones another boost. AirPods are among the top-selling electronics, says Adobe Analytics, thanks to a new $249 noise-cancelling version called AirPods Pro.

Selling more expensive versions of recent products is a popular, successful Apple strategy. It did this with iPhones and iPads. Once again it is expected to work. This year, Wedbush analysts expect AirPod sales to reach 65million, double last year’s sales. The three versions could mean revenue of $13bn, or 5% of expected revenue this financial year for a product that was launched in 2016.

Their success is partly because they are not confined to Apple devices. Popular gadgets have become useful to Apple as unit sales of iPhones, the group’s biggest product, have stalled. The idea that Apple can switch from products to services kept its stock market value buoyant, even as the smartphone market matured. Competitors have yet to unseat the group. Google and Microsoft plan to introduce wireless earbuds but neither has delivered. That leaves Apple to scoop up this year’s Christmas season.

The success of AirPods is not enough to make up for slowing smartphone demand. Revenue in “wearables, home and accessories”, including AirPods, rose more than 50% in the last quarter. Yet revenue for the year fell 2%. Next year, Apple expects to do better as iPhones supporting faster 5G wireless technology are released.

Apple has proved it can still create popular new products, but earphones are too small to carry the whole company. /London, December 3

© The Financial Times 2019