Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Apple's Planning All-New AirPods for 2020

By Ashraf Eassa - Dec 3, 2018 at 8:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company is prepping a mild update for the devices next year, too.

Apple's ( AAPL -1.17% ) AirPods line of wireless earbuds have been an unqualified success

The company has been selling the current generation of AirPods since their December 2016 rollout alongside the iPhone 7 and 7 Plus -- devices that did away with the traditional 3.5mm headphone jack.

Apple CEO Tim Cook on stage.

Image source: Apple.

Now, according to analyst Ming-Chi Kuo with TF International Securities, by way of MacRumors, Apple is planning to update the product line next year as well as in 2020. 

Let's take a closer look at Kuo's comments.

Wireless charging case in 2019, redesigned models in 2020

In the first quarter of 2019, Kuo says, Apple is set to introduce an "upgraded model" of its AirPods "with wireless charging support." That model, the analyst claims, will "benefit shipments."

Then, in the first quarter of 2020, Kuo asserts the company will launch an "all-new design model" of the AirPods, which he believes will "boost replacement demand to launch" in the first quarter of 2020. 

The idea is that while the refreshed model that's set to come out in the first quarter of 2019 should improve the AirPods product line's value proposition to customers not yet on the bandwagon, such a model isn't likely to get too many current-generation AirPods owners to ditch their old models. 

However, if Apple introduces a radically redesigned model in early 2020 as Kuo claims, such a product would not only serve to attract new users but could also get current owners to upgrade, hence Kuo's comment about how that product could serve to "boost replacement demand." 

A lot of room to grow

"Kuo notes that fewer than 5% of iPhone users currently own AirPods," MacRumors wrote, "and with over 1 billion iPhone users worldwide, there are 'great potential growth opportunities' for the accessory," particularly as Apple introduces newer, better versions of the AirPods in the coming years. 

And, if Apple does its job correctly, that installed base of iPhone users could grow in the years ahead. Indeed, during Apple's Nov. 1 earnings conference call, CFO Luca Maestri told investors that the "installed base of all our major product categories is at an all-time high and has been growing over the last several quarters." 

That comment came in the context of the growth opportunities for the company's services business, but it also applies to the opportunity to sell accessories such as AirPods that work best with Apple's products.

Putting some numbers to that potential expansion, Kuo wrote that he sees "dramatic growth" in AirPods, from a range of 26 million to 28 million units in 2018, presumably in reference to the calendar year, to a range of 100 million to 110 million units in 2021.

If he's right, then this product category is set to enjoy astronomical growth and produce a noticeable impact on Apple's wearables, home, and accessories segment, which generated about $17.4 billion in revenue during the company's fiscal 2018. A doubling from, say, 27 million units shipped in calendar 2018 to 52.5 million units in 2019 (using the midpoints of Kuo's range estimates), would mean an incremental $4 billion in revenue to Apple, assuming an AirPods selling price of $159.

If AirPods shipments grow at anywhere close to the rate Kuo predicts, the financial impact would be quite impressive.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$161.84 (-1.17%) $-1.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/05/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.