This analysis is by Bloomberg Intelligence Senior Industry Analyst Anurag Rana. It appeared first on the Bloomberg Terminal.
AirPods are likely to become Apple’s third-most important product over the next decade, right behind Macs, and our analysis suggests sales of the audio accessory can reach $22 billion by fiscal 2024, 14% above consensus. Our most recent survey shows 62% of US Gen Z consumers own AirPods, and we see similar penetration for all ages by 2030.
Sales could soar 14% above consensus in 2024
The rising popularity of AirPods and our proprietary survey suggest that consensus isn’t accurately accounting for the product’s growth potential. Sales in fiscal 2023 that ends Sept. 30 could modestly improve from 2022, but we expect a bigger rebound in 2024. AirPod sales exploded during the pandemic and, given that the replacement period for them is roughly three years, there could be a sharp bounce in 2024.
Our analysis shows that AirPod units could expand 12% a year for the next five years, even if Apple’s installed-user base only rises 5% because of a steady increase in the attach rate, to 52% in 2027 from 40% in 2022. Consequently, sales could reach $22 billion in 2024, roughly 14% ahead of consensus, even when modeling just a slight increase in average selling price.
Prices likely rise, with pro model at $249
AirPods could have an average selling price (ASP) of $181 when 2022 is all accounted for, according to the latest IDC data, $24 less than in 2021. We expect the ASP to eventually return to about $200, as the high-end model is $249. By comparison, the second-generation AirPods are priced at $129 and third-generation ones $169. Much like the iPhone, the base of AirPod users has a higher percentage of lower-tiered products, making it harder for ASP to jump rapidly. Nevertheless we expect a modest pricing increase.
iPhone attach rate of 60% by 2030 appears achievable
US Gen Z consumers aged 18-24 showed a high level of ownership at 62% in our most recent proprietary iPhone survey, compared with 47% for the overall population. That 47% figure for the US tracks closely with the global AirPod attach rate of 40% to the iPhone, and this figure could inch up. Our AirPods unit shipment and revenue scenario assumes that the attach rate could reach 60% by 2030. Along with modest improvement in ASPs, this could lead to $45 billion in sales in eight years.
Sales could surpass iPad, come right behind Macs
AirPods could bridge the gap of around $12 billion vs. iPad over the next decade and become the third-most important Apple product, right behind Macs. Macs and iPads aren’t growing as quickly as AirPods since the latter doesn’t have the wide adoption that the former ones do. Macs and iPads also have lower attach rates given their ASPs. Our US Gen Z survey showed just 36% of iPhone users owned an iPad, compared with 62% for AirPods. It’s also likely that the average refresh cycle of AirPods eventually declines, due to the iPhone helping sales.
Bloomberg
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