Totally Wireless Earbuds Bring the Loud to Stereo Headphone Sales

So far, 2017 has been a great year for headphones. Through July, U.S. dollar sales and average prices increased 22 percent, and 18 percent, respectively, over the same period a year ago. A number of new and interesting devices have also debuted this year. Recent products from industry headliners like Bose, Sony, and Beats represent just a few of the innovative headphone devices to come to market in the past year. Sure, much of today’s growth is due to the continued shift to Bluetooth, but the wireless revolution occurring in headphones has given rise to a wave of fresh audio offerings.

Totally wireless earbuds represent a new segment that has come out of the emergence of Bluetooth. Bragi and Doppler Labs were among the first companies making totally wireless earbuds, but the entrance of tech titans like Apple and Samsung (but mostly Apple) has led to a spike in unit sales in the segment. More than 900,000 totally wireless headphone units were sold in the U.S. since the start of the year, according to The NPD Group’s Retail Tracking Service. As fast as this segment has emerged, so have products that go beyond music streaming. Samsung’s headphones-slash-fitness tracker, IconX, features an optical heart rate tracker and 4GB of memory for music storage (eliminating the need for a music player) for those interested in a fitness product. There are also augmented hearing buds like Doppler’s Here Plus and Nuheara’s IQbudz, which are fitted with external microphones to change the sound around the wearer, making it easier to have a conversation in a loud restaurant or to tune out a crying baby on an airplane.

Some products have a loftier goal — making the wireless earbud a computing device for the ear. Since launching in December, Apple’s AirPods have accounted for 85 percent of totally wireless headphone dollar sales in the U.S., according to NPD’s Retail Tracking Service. With a use case centering on frictionless access to Siri and other tasks initiated by voice, AirPods really act as an extension of the iPhone. Apple’s path to leadership in the category is helped by disruptive pricing, brand resonance, and excitement over the W1 chip, which significantly eases Bluetooth connections to iOS and Mac devices. The Dash from Bragi features an ARM Cortex M4 CPU, as well as 27 sensors designed to detect movement and voice input. It is also the first noteworthy headphone brand to partner with IBM Watson. For these products, audio quality remains important, but takes a backseat to new capabilities added on top of the sound experience. With this in mind, it’s not hard to imagine a collection of mobile apps optimized for a voice interface similar to the growing ecosystem of Alexa skills.

Apple’s early domination of the category will continue to challenge competing brands entering the totally wireless market. New entrants will have to provide some differentiation in features, sound quality, or associated services and applications in order to stand out. Consumer reception of wireless earbuds is still forming, even as their use case continues to evolve. As Alexa skills and other voice-first content diversifies, headphones, including totally wireless earbuds, are the leading candidate to be the next piece of hardware to drive digital assistant adoption.

This post originally appeared on The NPD Group Blog on August 30, 2017