Demand for Apple’s AirPods audio accessories is reportedly falling, with Apple sitting on excess inventory as cheaper brands have offered more affordable alternatives.


STORY HIGHLIGHTS:

  • AirPods demand waning due to competition.
  • Apple has excess AirPods inventory on its hands.
  • AirPods production has been cut by 25-35% in 2021.
  • Samsung and Xiaomi earbuds are undercutting AirPods.

AirPods demand is falling amid competition

A new report from Nikkei Asia alleges that Apple is trimming its planned AirPods production by 25-30 percent in 2021. The company now expects to make 75-85 million total AirPods units for 2021 versus its previous forecasts of 110 million units.

According to a source:

The most significant order reduction is for the second quarter toward the start of the third quarter The levels of inventory [in warehouses] and in-store stocks of AirPods are currently high and demand is not as strong as expected.

AirPods demand is reportedly falling in the face of increased competition from the likes of Samsung, Xiaomi and other brands, the report added.

Despite its leading position, sales fell short of Apple’s expectations—the company had requested that suppliers build around 80 million to 90 million AirPods last year, multiple sources with direct knowledge of the matter said. The unsold AirPods became inventory, they added.

An executive-level source explained why no one should be surprised by this development:

It is not possible to grow 30 percent, 40 percent, 50 percent by shipments every year for a long time. At some point the growth will slow down and normalize. The time of high growth for AirPods might be past.

Apple’s hope is that the next AirPods coming down the pike this year will stimulate sales.

The AirPods lineup and upcoming models

Apple currently offers the following AirPods models:

  • AirPods: $159 with the standard charging case or $199 with the wireless charging case
  • AirPods Pro: $249
  • AirPods Pro Max: $549

Apple may release the next AirPods around the fall, rumor has it. Taiwanese trade publication DigiTimes reported in February 2020 that the Cupertino company could be working on a more affordable model of the AirPods Pro, dubbed AirPods Pro Lite.

How to use your AirPods Pro like a pro

The AirPods Pro Lite should be priced twenty percent lower than the normal AirPods Pro, which works out to about $199, because those earbuds apparently won’t feature noise cancellation.

Why falling AirPods demand was expected

If true, this can’t be good news for Apple considering that the AirPods is its fastest-growing product line. Apple doesn’t report AirPods sales, but shipments are estimated to have been growing by double-digit percentages since their introduction back in 2016.

On the other hand, this was to be expected as that’s how the markets work. When the first AirPods debuted, the market for true wireless earbuds was niche and no one in their right mind thought about spending more than $100 on Bluetooth earphones.

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But the AirPods have changed expectations of what true wireless earbuds should deliver, allowing Apple to charge a premium for AirPods due to features like zero-configuration pairing, fast device switching and so forth.

But as competitors jumped into the fray with inexpensive alternatives, expanding the market for these things, Apple’s share has had to fall even though the company probably continues to earn more revenue on AirPod sales than its competitors combined.