Apple Airpods – Next Big Thing?

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Imagine a start-up with $12 billion of revenue and 125%+ YoY revenue growth (two years in a row). Without knowing anything else about the business, what would you value it at? $50 billion? $100 billion? More?

That’s Apple Airpods Business.

In 2016, when Apple released their first ever wireless ear buds called AirPods, many thought of them as an add-on product that could boost Apple’s average iPhone sales price.

The idea was that instead of selling every new phone with earphones included, Apple could sell improved earphones as a second product, without changing the price of the phone. Smart move for an incremental revenue boost, but the magnitude of AirPods success has surpassed all expectations. Now it looks like AirPods could become much more than just an iPhone accessory.

iPhone Sales and Revenue

Since 2017, Apple has sold roughly 215 million iPhones per year. iPhone sales alone contribute roughly $150 billion of revenue for Apple each year. That’s roughly 80% of Apple’s total product revenue.

AirPods Sales and Revenue

Though Apple doesn’t share sales numbers for AirPods, industry analysts have converged on estimated sales numbers for each of the last 3 years.

It’s the combination of higher prices and higher unit sales that the future success of AirPods depends on. New iPhone accessories alone won’t move the needle for Apple in the long run, but the creation of an entire audio ecosystem just might. Keep an eye on AirPods feature improvements, and the possibility of an Apple audio operating system in 2020.

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