It looks like the next major technology phenomenon may not be a better iPhone or advanced technology like augmented reality, but rather the evolution of the decades-old earbuds into the realm of true wireless — and Apple’s AirPods are clearly leading the charge into a brave new world among Chinese consumers and manufacturers.
We already know that Apple’s AirPods have been massively popular since they debuted in 2016, and the sales of the original AirPods never slowed down; even as users waited over two years for the second-generation model to arrive, they still kept buying the originals, which dominated the market at the end of 2018, with 35 million units sold and a 75 percent global market share — second only to the iPhone as Apple’s fastest-selling product of all time.
Many other companies have attempted true wireless earbuds with limited success, but it seems that Apple’s AirPods have set the standard for the technology, and according to the South China Morning Post, the popularity of Apple’s true wireless earbuds is now creating a whole new surge of earbud development in China, with true wireless stereo expected to “become the next big thing in consumer electronics.”
Now that smartphone growth has peaked, the consumer electronics industry has been looking to other avenues, and while Apple itself continues to work on the kind of moonshot products like augmented reality glasses that only a trillion-dollar company can ever hope to pull off, Chinese manufacturers are looking at ways in which they can benefit from more down-to-earth technologies, and the popularity of AirPods suggests earbuds could signal a major new way ahead.
Chinese stocks in this area are also rallying, with companies like Luxshare Precision Industry, the main assembler of AirPods for Apple, seeing stock increases of more than 200 percent in the past year alone. Companies that supply components for Apple’s AirPods are seeing similar benefits.
A Massive Untapped Market
What’s interesting is that despite how rapidly Apple’s AirPods have been selling — stores can’t keep them on the shelves — investors think that this is just the tip of the iceberg for an emerging true wireless earbud market that could be worth billions of as-yet untapped dollars.
For instance, analysts Liu Xiang and Liu Shang at Zhongtai Securities note that the number of AirPods sold is only a fraction of the almost billion iPhone users out there — they estimate about 10 percent — implying huge room for growth not only for Apple’s own AirPods products, but also for other Chinese-made alternatives.
However, analysts also credit the “quality” of AirPods as the reason for its new heights of popularity — specifically the convenience of its small size, stable Bluetooth connection, and easy setup and tight integration with the iPhone. This is something that other headphone manufacturers haven’t been able to achieve, and it’s a whole new ball game in the market. According to Alex Ng, an analyst at CMB International Securities, it’s even more surprising how Apple has been able to hike the prices so rapidly, with the AirPods Pro easily selling at 56 percent more than the first-generation.
We are still in a very initial phase where the wireless earphones are getting popularised fast. With the costs set to come down in the future, wireless earbuds will become a must-have item for smartphone users.Eric Fei, Chinese stock trader
Like many products before, Apple is being seen as a pioneer at increasing awareness of true wireless earbud technology, and many other companies hope this will help them market their own wireless earbuds to try and appeal to the hundreds of millions of iPhone users who for whatever reason haven’t already bought into the actual AirPods.
Unfortunately, as the popularity of AirPods increases, Chinese companies are more incentivized to produce knock-off versions too. While some outright counterfeit products have appeared in the infamous Huaqiangbei electronics marketplace in China, many more companies are simply releasing their own wireless earbuds with an AirPods-like design under their own brands, hoping to capitalize on the brand recognition of Apple’s design language.
While these third-party lookalikes can’t even begin to match the quality of Apple’s own AirPods (and AirPods Pro) — they’re basically just “dumb” Bluetooth earbuds by comparison — many companies are hoping that the design will attract users who are unwilling or unable to pay the higher Apple price tag but still want to be able to rock the now-iconic “AirPod look.”