How Apple created a billion-dollar industry out of thin Air
October 10 2021 · 3 min read
~Reader special by Shams Ul Arifeen
On September 7th, 2016, Apple much to the confusion to everyone announced that it would be removing the 3.5mm headphone jack from its much-coveted iPhone. The single keynote created what is now a billion-dollar market for wireless earbuds. Went away the $20 wired headphone and came in the new $150 earbuds.
Competitors hit back on Apple mocking it for removing such an indispensable feature to a smartphone and fans scratched their heads to why “technological growth meant removing features by Apple”. Its Android rival Samsung, creating an elaborate marketing campaign mocking Apple for removing the “jack” in 2017 to woes in those wired headphone fans. But what they didn’t know was Apple was playing the long game of absurd profits.
Grab from Samsung’s marketing ploy to mock Apple and its users
Now five years later do we understand what Apple had devised, A method of further locking its users into the “Apple ecosystem” and making absurd profits. Eventually, other companies slowly ditched the use of the jack, supplementing them with wireless earbuds.
This is not to say that others were forced into following the market trend, once they saw the absurd profits Apple was making, they simple jumped on the bandwagon. Greed triumphs morals, eventually Samsung also ditched it in 2019, covertly deleting those previous taunting’s of Apple.
But the question does remain, how lucrative is the wireless earbuds market and why is everyone including their grandma is selling one. From known tech companies such as Samsung, Xiaomi, and Apple to celebrities like DJ Khalid, Nicki Minaj, and Ray Jay, everyone wants to sell you their brands of wireless earbuds.
The answer lies in the Profit Margins of selling these earbuds. What people don’t know is that each of these earbuds has a profit margin of over 100% or even more. An Airpod might cost you some $159 but for Apple, it makes it at a manufacturing cost of $59. That gives apple a $100 Profit margin which is unlike any tech product in the market.
Seeing these sweet profits everyone rushed in to present their version of wireless earbuds for customers. Profits were so high that companies were trying to sell any and every kind of wireless gadgets, just this year Nokia announced 12 different wireless gadgets along alongside its smartphones.
The wireless earbuds market now has an annual sale of 310 million units in 2021 and is forecasted to increase exponentially. Apple alone through its Airpods line up makes $23 billion just through a single product and $2 billion shies of Netflix’s annual revenue.
The Increasing sales and high margins for wireless earbuds can be attributed to many factors but one stands out the most and is crucial for consumers to understand. The ambiguity of wireless earbuds and their features allows companies to sell us their products with high profits. Through clever marketing ploys, they hype up vague features such as “high base” and “comfortable design” while downplaying actual statistics of it like “driver” and “Sound pressure”.
The buyers need to be informed and cautioned to the marketing gimmicks being done by companies to sell you sub-par and expensive products. Let me know if you want me to write a guide on how to identify good earbuds from bad ones.