It's been nearly three years since investors first heard rumors of Apple (AAPL 5.98%) working on a set of premium over-ear headphones. At long last, the Mac maker officially announced the product this week, dubbed the AirPods Max. The news comes as Apple has been aggressively expanding its portfolio of audio products and accessories, and the company is leveraging the existing AirPods brand.
Here's what investors need to know.
Image source: Apple.
Say hello to AirPods Max
For starters, AirPods Max are pricey at $549. That puts the headphones at a meaningful premium compared to the competition, which includes headphone heavyweights like Bose and Sony. For example, Bose's flagship Headphones 700 cost $340 while Sony's popular WH-1000XM4 are priced at $280.
AirPods Max will feature active noise cancellation (ANC), computational audio that leverages software to deliver high-fidelity sound quality, and Transparency mode. The product also includes Apple's custom H1 chip, the same silicon found in the second-generation AirPods and PowerBeats Pro that handles Bluetooth connectivity and enables the automatic pairing and switching technology.
The headphones will come in five different colors, and Apple says that AirPods Max use an acoustic design with a custom dynamic driver to deliver immersive sound. The Cupertino tech giant is adding a Digital Crown, borrowed from the Apple Watch, for audio controls and Siri activation.
The AirPods Max charge with a Lightning connector, and Apple is claiming battery life of around 20 hours. There is an included carrying case that put the headphones into a low-power state.
It turns out that some of the previous leaks, which suggested that Apple would use touch pads for controls or have swappable headbands for greater customization, were inaccurate. The company may have also changed certain features throughout development.
Maintaining the lead
The popularity of the growing AirPods lineup has been instrumental in driving growth in Apple's wearables business. That segment is now the size of a Fortune 130 company, according to CFO Luca Maestri. That's Apple's roundabout way of saying that trailing-12-month (TTM) wearables revenue is in the ballpark of $24 billion.
AirPods Max should qualify as hearables, or ear-worn wearable devices. For example, market researcher IDC's definition of hearables require the gadget to offer advanced functionality beyond just audio, such as incorporating a virtual assistant or audio enhancements. Apple is the No. 1 wearables vendor in the world, with 33% market share in the third quarter, according to IDC.
Costing $300 more than AirPods Pro, AirPods Max are now the company's most expensive hearable product. The new headphones should help Apple build on its current momentum in wearables and audio accessories, while moving upmarket in terms of pricing.
