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
There is an incrementalism to all this that has probably escaped the larger blogosphere’s attention to date. Each of these highly desirable products feeds customers into the larger Apple ecosystem, a truly virtuous cycle that was not taken into account in Apple’s valuations until literally less than a year ago.
Skepticism about the applicability of Apple’s higher valuation is fading fast. And should.
Blue for me, green for Donna.
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 🙂 )
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.
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.
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.
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.
This feels like 2007 with the iPhone all over again going into 2021.