Apple’s AirPods Max: What the analysts are saying

Excerpts from the notes I’ve seen. More as they come in.

Neil Cybart, Above Avalon: Apple Unveils AirPod Max. Based on the technology packed into AirPods Max, my estimate is that the cost of goods for this product is substantial. AirPods Max does not look like a gross margin driver. When it comes to gross margins, recall that Apple follows a gross profit optimization strategy – Apple products aren’t priced to have a specific gross margin percentage – say 25%. Instead, products are priced in such a way as to maximize gross profit dollars. That may include running with a lower margin if it helps boost demand. Vice versa, a product may have a higher margin per unit if Apple doesn’t see the higher price hurting demand. My best guess is that at $549, AirPods Max has about $70 to $75 of gross margin dollars available.

Gene Munster, Loup Ventures: AirPods Max and Fitness+ Strengthen Apple’s Ecosystem. Apple rounded out an improbably strong year of product releases with the announcement of AirPods Max and Apple Fitness+ availability. While individually these products won’t move the needle, they collectively strengthen the fabric of the company’s hardware, software, and services integration… Given the price and design, we expect AirPods Max to quickly become a status symbol.

Ben Bajarin, ThinkTank: Apple’s December Announcements. When I first heard the rumor about AirPods Max being announced on December 8th, I was initially skeptical because of the late release, mostly missing the holiday shopping cycle. The more I thought about it, the more it made sense they would be super high-end, which would not be the same type of holiday gifts as AirPods or AirPods pro would be. Given the ultra-end high creator, audiophile, target audience, this announcement coming in December will not make an impact but getting them to market matters most. $549 is a pricey solution, but audiophiles would know it’s hard to get a great pair of studio headphones for less than $500, and some of the top ones used by DJs and producers can cost over $2,000.

See also: What’s inside Apple’s AirPods Max

11 Comments

  1. David Emery said:
    They cost more than a share of AAPL pre-split.

    My ears aren’t good enough to appreciate the sound at that price. At some point, though, I’m sure I’ll try them out at an Apple Store. (Telarc “1812 Overture” with its digitized black powder cannons 🙂 )

    3
    December 8, 2020
    • Bart Yee said:
      Heh, knowing Apple, not only will you hear the canons, reverberations, and the Doppler effects, you may smell the saltpeter and smoke wafting across the battlefield.

      0
      December 9, 2020
  2. Gregg Thurman said:
    Apple’s Uber growth engines are going to be Macs (feels strange saying that), iPhones, Wearables (as a category) and Services (again as a category). I don’t see much growth coming from iPads, but what do I know?

    The AirPod Max is an incremental addition to the glue that binds it all together. Being in, and dominating, so many product categories, using its own proprietary hardware and software, ensures continued double digit growth where share is presently very low double digit.

    I can’t imagine a rosier future.

    3
    December 8, 2020
  3. Bart Yee said:
    Folllowing on Horace’s comments: To me it’s not surprising this is priced at a high end level…for now. Apple is creating a hardware and market proof of concept here, and if successful, reviews and sales will reinforce validity. By getting high end influencers (NBA players?) and users (on Zoom, audio production, DJ, and other media) use visibility, like AirPods did, it will become another aspirational product. It could even soar with high end air travelers as that segment returns.

    Sufficient sales will be followed by enhanced economies of scale in production, materials, and assembly, lowering BOM and costs. Iterations will follow further up and farther down price ranges, all powered by Apple custom Silicon and additional accessories. Colors, custom audio profiles, addition of microphone communications for two or multi-way use are mere examples of how this opens up yet another product category for Apple.

    1
    December 9, 2020
  4. Bart Yee said:
    Some will complain that the AirPods Max are not built or priced for the masses or markets. That’s true! It’s a halo product, an extension of Apple’s stretch and reach into audio where you can really sense and experience it. Give it 2-3 years and multiple versions at different price points and features will appear and round out this line. Add interactivity with Apple Visual ™ AR and the possibilities are endless.

    Eventually costs will come down, margin will go up and both will stabilize. What will keep expanding will be the Apple ecosystem and the stickiness of the user base.

    1
    December 9, 2020
  5. Kirk DeBernardi said:
    Does anyone here feel as I do?

    I strongly feel that Jony Ive had a hand in the design of this product.

    It may be his first work-for-hire product for Apple.

    0
    December 9, 2020
  6. Tommo_UK said:
    I’d say this year’s entire product line up has been in the planning for 2-3 years and probably represents Jonny Ives goodbye gift. He’s left an incredible legacy, strong philosophical and design led foundations for Apple to build on for years to come.

    This feels like 2007 with the iPhone all over again going into 2021.

    0
    December 9, 2020

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