iPhone 7/Plus is a $5 billion opportunity for Beats

“As was widely expected, Apple got rid of the headphone jack on its iPhone 7 and subsequently announced a portfolio of new Beats wireless headphones. We noted last month that eliminating the headphone jack would accelerate a hardware revolution in the headphone market of which AAPL-owned Beats would likely be the biggest beneficiary,” L&F Capital Management writes for Seeking Alpha. “With the announcement now official, we have sized this market and believe the iPhone 7 presents a $5 billion opportunity for Beats.”

“We believe the iPhone 7 will sell at least as well, and likely better than, the iPhone 6s. The iPhone 8, which is rumored to have some major upgrades, also will likely sell well,” L&F Capital Management writes. “Buyers of both of these phones will be forced to use wireless or lightning-enabled headphones (if they want to listen to music), of which current trends suggest wireless will be the more popular by a significant margin.”

“About half of iPhone owners use their iPhone to listen to music, while most (around 80%) do not own a pair of wireless headphones, implying that around 40% of iPhone 7/8 buyers next year will be strongly inclined to buy a pair of wireless headphones. We estimate Beats owns 45% of the wireless headphone market, so that means 18% of iPhone 7/8 buyers are strongly inclined to buy a pair of Beats wireless headphones next year,” L&F Capital Management writes. “Conservatively assuming 140 million iPhone 7/8 models ship next year, that implies just around 25-26 million Beats wireless headphone shipments. At a $200 ASP, that is a $5 billion revenue opportunity for Beats related to iPhone 7/8 purchases.”

Read more in the full article here.

MacDailyNews Take: And how millions upon millions will also buy Apple’s revolutionary new AirPods with the new ultra-low power Apple W1 chip (also in the new Beats wireless headphones).

This is what you call a win-win situation for Apple and their customers who get higher quality sound, water- and dust-resistant devices, thinner, lighter devices, iPhones with stereo speakers, and the opportunity for future advanced (biometrics, etc.) that the 3.5mm anachronism simply could not offer.

By killing the 3.5mm headphone jack, Apple is doing something extraordinary for music sound quality – September 8, 2016
No headphone jack? No problem: How to listen to music while you sync and charge your new iPhone 7/Plus – September 8, 2016
Apple VP calls 3.5mm headphone jack ‘a dinosaur,’ says ‘it’s time to move on’ – September 8, 2016
Apple kills the headphone jack – September 7, 2016
Apple reinvents the wireless headphone with AirPods – September 7, 2016
Apple’s iPhone reveal: Death of antiquated 3.5mm headphone jack heightens anticipation – September 7, 2016


  1. I still say there’s a huge opportunity for somebody to create a physical tether to catch an AirPod should it fall out and get lost or damaged. Apple could market these ‘necklaces’ much the same as they do the bands for the Apple Watch.

    1. I’m not sure, which is “the old product” here? The older iPhones? Well, of course they would “denigrate” those with the new model, that’s exactly how the industry works!

      As for Beats, they are just one relatively small fish in a giant ocean of headphone makers. Many others have already announced (or are already selling) wired Lightning models, in addition to an existing, and a very healthy, assortment of Bluetooth ones.

  2. Wonder if they’ll make a lighting to standard audio cable for my Mixr’s. Possible due to audio jacks for each speaker. Won’t take advantage of any audio quality improvements with lightening, but would be more convenient.

      1. No. I’m talking about an actual cable with controls and mic. Not an adapter. The cables on my beats Mixr’s are removable, interchangeable with an audio jack for each headphone. I know the phones come with the adapter, lol!

  3. I think the AirPods look futuristic/21st century cool, and for the person on-the-go they are the perfect gift, especially in this day and age of constant communication. So now people have three ways to communicate when mobile. They can pull their phones out of their pockets, they can glance at their Apple Watch or they can use Siri via the AirPods. I think the implementation is freaking brilliant, and kudos to the engineering team that invented the charging case. Apple not only released a cool wireless headphone, they invented a new product category, and it’s super fly (old-school term for it’s really lit).

    1. Actually, they look a lot like a white version of Sputnik. That will be their nickname, I bet $$ that’s what people will call them, lol!

      That said, I’ve seen Sputnik in person (a to scale recreation), and it still has a futuristic alien look.

  4. The estimates and the numbers in this article are wildly off, and they are based on some completely wrong assumptions.

    First off, the idea that 40% of iPhone 7 buyers would be inclined to buy wireless headphones has no basis in current trends. Every single iPhone over the past ten years came with bundled wired headphones, and the same is with iPhone 7. Vast majority of owners use the bundled ones. There is no reason to expect any more of the iPhone buyers to be motivated to go wireless now than were before.

    Nobody is significantly affected by the loss of 3.5mm connector. For ordinary, average users, this may not even be something they would notice. They will simply put the 3.5mm adapter in some drawer and then try o remember where they put it if ever they want to connect their phone to an old-school audio device (an external speaker, receiver, amp) with the 3.5mm cable.

    I can’t believe this passes for research.

  5. Again: do the idiots that complained about the Beats deal, still feel they know better???

    Standard Beats headphones sales figures (a proven track record) alone, would have paid back Apple’s investment with 2-3 years.

    Apple’s new incorporated proprietary W1 chip is a golden opportunity for Apple to lead the new wireless heaphone (etc…) field.

    With this new chip, Apple has solved the power and signal strength bottleneck associated with bluetooth and addressed hi fidelity uniquely.

    This is an exclusive advantage Apple has over everyone else and will sell millions of Wirelss Beats headphones, since regula Beats headphones are already a popular choice.

    Apple may even licence this W1 chip to the industry, but regardless – this is exactly what Apple had in mind when it purchased Beats – duh!!!

    1. I would not buy anything branded Beats if Jesus Christ, straight outa
      Atlantis in the flesh, told me to.

      The whole thing is marketing hype to sell headphones that cost 10x more than the analog wired units. No earpod playing lossy files is going to be high fidelity in a serious way- ask any musician.

      Go to a local high end audio dealer and play the same song sourced from a high quality CD and then play the same song from a lossy and compressed Apple Music file. Avoid close miked studio stuff of direct to file digital music- use real instruments redcorded live.

      If your hearing is not impared the difference will be stunning.

      1. You might not buy Beats headphones and personally, neither would I, but Beats are in vogue and “untethered” they they would habe cool appeal and sell much better than the wired ones.

        Also, “Line out” signal, which is a ‘direct out’, is of much higher audio quality and fidelity than the inferior “headphone out” signal, which is routed via the (now discontinued) 3.5mm mini jack connector. The W1 brings high quality wireless audio that is better than what you got i. The headphone out – if you don’t ‘believe that, hook up the signal from the current iphone 6s ‘ headphone out’ to an osciliscope and see how dirty it is.

        I have listened a pair of Sennheiser Bluetooth headphones. They’re pretty good, but the sound is limited, in quality and volume.

        Apple has solved this problem, with its W1 chip.

  6. Obviously the aftermarket accessories industry is going to have to adapt. It would be surprising if wireless earbuds with or without a tether ever become popular with more than a small percentage of users. There are hundreds of reasons why people like the analog headphones they already own, or will just use the default headphones that Apple includes in the box. To the mainstream user, $160 is too much money to replace a reliable wire.

    For audiophiles who own excellent analog headphones, they probably won’t adopt Apple’s D/A converter and absolutely won’t even touch Apple or Beats headphones.

    A product like Arcam’s MusicBoost — though certainly not for everyone — may be the audiophiles’ preferred solution.

      1. The word is “amateur”.

        Many of them are professionals, and those who aren’t still spend enough to be. For Apple or other companies to ignore the needs of the well-heeled early adopter would be stupid. It remains to be seen if Apple’s gamble will pay off … for accessory makers, maybe it will. For Apple, maybe not. People eventually get tired of clumsy expensive workarounds to solve a problem that they don’t have.

  7. Lets see… Margin minded Apple (for no real reason) removes the headphone jack from iPhones.

    Now they can license the Lightning interface to anyone who wants to make compatible with Apple (only) headphones.

    They get sales of Beats headphones. Beats is the number one bluetooth headphone company.

    They just got rid of one port that costs nothing to use and earned them nothing. Now they get millions in sales of licenses or headphones. Steve is probably a little pissed off now. Zero benefit to the consumer. Perhaps the iPhone 8 or 9 will remove the analog audio output functionality for the Lightning connector. Where will we be then?

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