Apple – Other people’s products.

Apple looks to be going after both audio hardware and radio.

• Apple has cleared its decks of rival audio products in a sure move that a wider range of speakers, headphones are coming in a move that will help offset the weakening revenue generation from the flagship iPhone product.
• At the end of September all headphones and speakers from Bose, Logitech and Sonos were removed from Apple’ physical and online stores presumably to make space for its own products in yet another sign of how dangerous it can be to rely on Apple to distribute one’s product.
• The only 3^rd party speaker left is a conference room speaker designed for enterprise conference calls which clearly does not compete with anything that Apple currently makes.
• The flurry of leaks that turns into a torrent at this time of year is expecting the Airpods Studio (over-ear headphones), Airpods Solo (on-ear headphone), an update to existing Airpods and a HomePod Mini which may be launched later this month when the iPhone 12 launches.
• It would make sense to launch them with the iPhone as the products are often used together and with one event already out of the way, there are fewer products left to launch.
• I think that this may also go hand in hand with an effort to push deeper into audio content.
• Apple has long been sitting on the border of radio which offers a much greater revenue opportunity than recorded music.
• Thanks to streaming recorded music was a $20bn market in 2019 but radio advertising globally is worth more than double that, just under half of which is in the USA which is Apple’s strongest market.
• This makes radio a much riper plum to go after as opposed to recorded music.
• This is why Spotify is getting into podcasting and why Apple recently rebranded Beats 1 to Apple Music 1 and launched two more stations.
• These are Apple Music Hits and Apple Music Country, two stations that are clearly aimed at the home market.
• Apple Music One is currently available in the Apple Music app but is not yet widely available enough to have a credible crack at taking on the existing radio stations.
• However, every iOS device with will now set up for Apple Music 1 and its descendants making it the default streaming radio station for over 600m users.
• History has shown that being the default setting or option on a device confers a huge and often unsurmountable advantage (see here).
• Hence, as radio moves more towards streaming, Apple has the means, opportunity and motive to go after the radio broadcasting market.
• As one music industry executive appropriately put it 5 years ago: “Apple has parked its tanks on Radio’s lawn”.
• Apple is finally moving its tanks into position to take command of a new segment.