Gene Munster: AirPods Max and Fitness+ strengthen Apple’s ecosystem

Loup Ventures’ Gene Munster and David Stokman say that AirPods Max and Apple Fitness+ collectively strengthen the fabric of Apple’s hardware, software, and services integrated ecosystem.

Gene Munster and David Stokman for Loup Ventures:

Over-the-ear AirPods for $549, AirPods Max are an impressive product with a price to match… Given the price and design, we expect AirPods Max to quickly become a status symbol.

The move to enter the over-the-ear headphone market begs the question of what happens with the Beats brand long-term. We believe Beats revenue in 2020 will approach $800m, down from about $1.8B in 2014, when Apple acquired the company. Despite this decline, Apple got what it wanted with music streaming services and learnings that were the foundation for AirPods. In the end, the $3B Beats acquisition payback picture was favorable.

Apple Fitness+ launches on December 14. At $9.99/month, it will compete with two segments: the 510k plus Peloton Digital customers paying $12.99/month, and the 175m gym members globally, of which 65m are in the US. Over the next year, we expect total gym memberships in the US to decline 10% to 58.5m, as a result of the workout-from-home shift spurred by the pandemic.

We expect a halo effect between Apple Watch and Fitness+, given the app requires an Apple Watch Series 3 or later. Today, we estimate 82m Apple Watch Series 3 or later have been sold, implying 92% of the active iPhone user base needs to buy a Watch to use Fitness+.

MacDailyNews Take: Yes, AirPods Max are already at status symbol status and Apple Fitness+, if done right, (we’ll find out on Monday, December 14th, could have a huge halo effect, especially as it works even with lower-priced Apple Watch Series 3 or later!