Days of explosive growth for AirPods may already be over

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AirPods Pro with black background discounts
AirPods have been a massive winner for Apple since 2016.
Photo: Apple

The massive growth days of the AirPods may already be over, according to renowned Apple analyst Ming-Chi Kuo.

In a new note to clients seen by Cult of Mac, Kuo said he anticipates a year-over-year decline in AirPods shipments in 2021. If true, this would be the first year in AirPods history that sales didn’t experience explosive growth.

“We cut our forecast of 2021 AirPods shipments by 30–35% to 75–80 million units, which implies the 10–15% YoY decline,” Kuo wrote. “We differentiated from the market’s consensus of 110–120 million units in 2021, indicating 25–30% YoY growth.”

Apple introduced the AirPods in December 2016 just in time for the all-important holiday season. From there, demand went crazy. Apple supposedly sold between 14 million and 16 million AirPods in 2017, the earbuds’ first full year on sale. This was followed by 35 million units in 2018, almost 60 million in 2019 and — according to Kuo — 90 million units in 2020.

During that time, Apple expanded the AirPods range, releasing a second-gen version early in 2019 and AirPods Pro in October that year. It then introduced its first over-the-ear model with the AirPods Max in 2020.

AirPods 3 won’t ship until the end of 2021?

Currently, Apple is supposedly working on third-gen AirPods that will boast an AirPods Pro-style design but lack active noise cancellation. AirPods 3 have been heavily rumored as being part of a March Apple product-release event. Interestingly, Kuo’s new report suggests the upgraded design won’t go into production until Q3 2021. That would make it likely that they would arrive in time for the holidays rather than summer.

Kuo notes that it is not yet clear if the AirPods 3 will replace the AirPods 2 completely. While Apple discontinued the first-generation AirPods in March 2019 after releasing AirPods 2, Kuo isn’t so sure that’s how things will play out this time.

“We think it is still difficult to determine whether AirPods 2 will end production after AirPods 3 goes into mass production,” Kuo said. “Apple’s dilemma is that if AirPods 2 is sold at a lower price, it may affect AirPods 3 demand, but if there is no lower-priced AirPods model, it will not be conducive to AirPods shipment.”

End of major growth for AirPods

The end of massive growth for the AirPods wouldn’t come as an enormous surprise. The wireless earbuds market continues to grow, with more and more companies moving in — many with significantly cheaper offerings. This trajectory is hardly an unusual one for Apple. Typically, especially when it is an early mover, Apple enjoys several years of massive growth for hit products.

During that time, other manufacturers create rival products that grab market share but fail to slow Apple’s sales momentum. After a while, as markets become more saturated and third-party products get better, Apple’s gains stall. This happened with the iPhone and a number of other products during its history. The only current product category where growth appears to continue unabated is the Apple Watch.