True Wireless continued to drive growth, accounting for close to 40% of total headphones shipped in the quarter, up from 36% in Q4 2019. This has helped Apple retain its position at the head of the brand share pack with strong performances from its second-generation AirPods and AirPods Pro offerings. Samsung climbed to the second spot in True Wireless due to the success of its Galaxy Buds and Galaxy Buds+, and benefitting from a soft-bundling strategy with some of its flagship smartphones. Xiaomi also grew its market share in True Wireless.
"During the initial manufacturing shutdown that was imposed to control Coronavirus, many headphone brands had enough inventory to feed the supply chain in Q1,” says Futuresource Consulting. “Though it has not been a trouble-free ride, with some product launches delayed either by choice or by brands not being able to secure supply. In Q2 we expect the sector to take a double-digit volume hit. This is due to a combination of the knock-on effect of manufacturing closures in Q1 2020, the lockdown measures in different countries, and disruption in the supply chain."
“Consumer demand is also being pulled in contradictory directions. People are working from home, or simply wanting to improve their home entertainment setting. Yet lockdown in many key countries is causing a contraction of the economy and pushing up unemployment levels, which means consumers are being more cautious and have less disposable income. We are seeing brands with good distribution deals with large food retailers or a strong online presence faring better than those that rely on specialist consumer electronics stores."
Futuresource research also shows that headphones shipments in the Asia Pacific region were not as severely impacted as other regions. Chinese manufacturing closures began in February, after the Chinese New Year, and were then maintained for around six weeks, with forecasts suggesting Chinese supply side issues could be overcome in H2 2020. Shipments in Western Europe were slightly impacted overall as the virus spread initially to Italy, France and Spain in Q1. US shipments didn’t perform as well as expected, considering the lockdown arrived much later, although the True Wireless segment continued to grow strongly.
“Our research shows the overall pricing for headphones remained stable in Q1. This was driven by the growth in True Wireless and the continued popularity of Apple AirPods. Looking to the future, it’s likely that pricing could come down slightly as brands try to compete to attract consumer spend in a weakening economy," the company states.
COVID-19: What changes for the headphones market?
With over 20 years’ experience in the audio Industry, Futuresource Consulting is uniquely positioned to provide meaningful data and strategic, fact-based insights.
The company's research is centered around providing a holistic view of the audio landscape, conducting expert industry interviews with key vendors across the supply chain and complementing these findings with detailed consumer surveys, the latest of which will be explored in the upcoming Audio Tech Lifestyles consumer research that will be release later in 2020.
2019 was another significant year for the headphones market, with a 55% year-on-year revenue growth, reaching $35.1 billion. Primarily, this was led by the growth of True Wireless, which accounted for over 1 in 4 headphone shipments.
Futuresource expects 2020 to be another year of growth for aftermarket headphones, despite the impact of COVID-19, both in terms of volume and value.
With the coronavirus pandemic impacting a range of industries worldwide, has the outlook for the headphones market changed for 2020?
These are some of the pressing questions that Futuresource will investigate for future report updates:
Is True Wireless cannibalizing sales of other form-factors?
What is the most likely impact of COVID-19 on both demand, supply and prices?
When can we expect the market to recover?
How are smartphone brands impacting the headphone market?
What new technology and use-cases can be expected to emerge in the next 5 years?