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Headphones Q1 Update: Global Value Continues to Surge Despite COVID-19
Headphones Market Analysis and Commentary
15 May 2020 - The global headphones market has posted a strong Q1, achieving revenues of $7.2 billion and year-on-year growth of 22% despite the impact of Coronavirus. That is according to the latest figures from Futuresource Consulting, as the firm releases its preliminary quarterly worldwide headphones tracker results.
True Wireless Leads the Way
True wireless continued to drive growth across all regions, 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 share to take third position in true wireless.
“During the initial manufacturing shutdown that was imposed to control COVID-19, many headphone brands had enough inventory to feed the supply chain in Q1,” says Adriana Blanco, Senior Market Analyst at 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 Experiencing Both Upward and Downward Pressure
“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.”
Asia Pacific Experiencing Less Disruption than Expected
Futuresource research 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 Futuresource estimates closures 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 did not 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,” says Blanco. “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.”
Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.