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Is Apple Resetting The Headphone Market As Sennheiser Wobbles

Sennheiser is already looking to sell their consumer headphone business due to market pressure with speculation now emerging that the arrival of Apple into the headphone market with their premium priced AirPods Max is set to inflict pain on the likes of Bose, Jabra, Bang & Olufsen, Sony and several competing brand who are going to have to rethink their strategies in the headphone market.

Sennheiser appears to be an early victim of the rapid expansion of the headphone market especially the development of active noise cancelling products.

Bloomberg recently reported that between Apple’s new over-the-ear play at the high end and aggressively priced competitors had put pressure on firms like Sennheiser are struggling to compete with the wireless expertise, app ecosystems and global reach of phone makers.

Once a mainstay of audiophiles, headphones have become increasingly essential and sophisticated — particularly since the pandemic — as people rely on them for everything from online teaching and gaming to video conferencing. A mix of better tech and new entrants are driving down prices also competing for headphone consumers are the likes of Samsung with their popular Galaxy Buds.

Apple, Samsung, and Huawei have already secure 32% of global headphone shipments in 2020, according to Futuresource analyst Rasika D’Souza. That share was even higher when it came to revenue, she added.

“Apple successfully created a niche for itself in this space by complementing its on-the-go ecosystem with a pair of truly wireless headphones” with the AirPods, D’Souza said. “Other smartphone vendors have really benefited from this trend.”

Gadget makers pipped traditional audio brands by making audio just one facet of a broader mobile experience, adding features like digital assistants and noise cancelling. That created a category IDC dubs “hearables” and estimates was worth $35.5 billion off 267 million shipments in 2020.

Jitesh Ubrani, research manager at IDC claims “The AirPods Max will open the door for higher-priced wireless headphones from the incumbents such as Sony, Jabra, and Bose,”.

“it will also put pressure on audiophile brands such as Bang & Olufsen and Master & Dynamic, as these companies have faced little competition within their price segments.”

Apple’s AirPods Max, went on sale in December, it has the processing power to adjust sound on the fly and support Apple’s nascent Spatial Audio feature, a Dolby Atmos rival that the company says improves movies and games by precisely positioning sound sources.

Spatial Audio works only in combination with an iPhone or iPad and a small selection of services so far but could be a differentiator and has been lauded by reviewers including Harman’s Sean Olive, an audio industry veteran.

The AirPods Max are a chance for Apple to twin its hardware with subscription services like Apple TV+ and offer a unique experience.

Samsung who own Harman and Harman are believed to also be working on integrated audio technology that works across their TV’s, smartphones, and tablets & PC’s.

At this stage, few brands have the same potential to pair hardware capability with a vast content portfolio.

“The big question is whether Apple Music starts releasing immersive music in their store that supports it. That could really make it take off,” Olive said.

Apple’s high asking price does leave room for more affordable alternatives, Matt Engstrom, director of product management at Shure told Bloomberg.

Had the AirPods Max been priced at $499, said Master & Dynamic founder Jonathan Levine, “that would not be good for me and it would not be good for a lot of people.”

The threat is a repeat of the AirPods scenario, where a successful Apple gadget encourages vendors to launch similar products, sparking a price war, said Ubrani. Hearable’s shipments in India jumped 258% after the average cost of AirPods-like wireless buds plunged to $45 from $110 thanks to a flood of competition, IDC estimates.

For now, the AirPods Max “validates headphones again,” Levine said. “Just like you could credit Beats with reinvigorating the whole headphone market, I think Apple is doing the same thing again.”

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