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Can Google's New Pixel Buds Finally Challenge Apple's AirPods Dominance?

By Evan Niu, CFA - Apr 28, 2020 at 9:00AM

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Apple is still the clear leader in wearables and hearables.

About two and a half years after Alphabet (GOOG -1.85%) (GOOGL -1.95%) subsidiary Google launched its original Pixel Buds, the search juggernaut is finally releasing a revamped second-generation model that has high hopes of challenging Apple's (AAPL -0.28%) AirPods, which have set the standard for truly wireless earbuds. The original Pixel Buds were not particularly competitive with AirPods, and Google had unveiled Pixel Buds 2 late last year. Google announced this week that Pixel Buds 2 are now available.

Can Google do better this time around?

Pixel Buds 2 in carrying case

Pixel Buds 2 are greatly improved from the first model. Image source: Google.

Pixel Buds 2 are truly wireless

Reviews have started to hit the web, and most agree that the second-generation model is a noticeable improvement. Design changes like ditching the wired tether and improved ergonomics are welcome adjustments. While audio quality is significantly improved, Pixel Buds 2 still lack active noise cancellation (ANC), but they're also priced competitively at $179.

Only one color is currently available (white), with other options to be available "in the coming months."

Perhaps most importantly, Pixel Buds 2 offer hands-free activation of Google Assistant, which could prove to be among Google's biggest advantages because Apple's Siri remains in an embarrassing state and still misunderstands basic queries. Google's virtual assistant is widely considered to be more useful and superior to Siri in just about every way.

AirPods start at $159, while AirPods Pro cost $249. Apple refreshed the AirPods a little over a year ago, and AirPods Pro (featuring ANC) were launched in October. The Cupertino tech giant isn't expected to release third-generation AirPods until 2021, according to respected Apple analyst Ming-Chi Kuo (via MacRumors).

Trying to take a bite out of Apple

Google is coming after Apple in the intensely competitive market for hearables, or smart audio products in the broader wearables space. Apple continues to dominate wearables with its AirPods lineup, according to market researcher IDC. The Mac maker grabbed 32% of all wearables market share in 2019, with volumes being largely driven by the growing lineup of audio accessories.

Microsoft is about to jump in with its $249 Surface Earbuds, which were delayed but could launch anytime now. Amazon released its aggressively priced Echo Buds ($130) last fall.

Google continues to increasingly focus on its hardware ambitions, which include its Pixel lineup of smartphones and smart-home gear with its Nest brand. The company is also expected to release a new mid-range Pixel 4a any day now.

Following Google's recent reporting change to break out YouTube and Google Cloud, hardware is now the second-largest category within Google's "other" revenue line item, which came in at $5.3 billion in the fourth quarter.

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