“When product-market fit happens, growth can be explosive.” — Gene Munster
From “Apple’s Path to a Sleeper Hot,” mailed Monday to Loup Venture subscribers:
We believe AirTags have the potential to be a sleeper hit with consumers and surprise investors over the long run by adding 1% plus to Apple’s overall revenue. While it sounds like a small number, 1% would equate to $3.3B on Apple’s expected 2021 revenue of $333B. As a point of perspective, Sonos, the audio company, does about $1.5B in annual revenue today.
Apart from the adoption lesson, there’s also a financial lesson from AirPods. That is, when product-market fit happens, growth can be explosive. We estimate that Apple sold about 80m AirPod units in CY20, the fourth full year of AirPod availability. At an ASP of around $170, this equates to $14B in revenue. We estimate the company will sell about 95m units in CY21.
Using AirPods as a reference point, we can get a sense of how many AirTags could be sold over the next five years. AirTags star at $29 per tracker and $25 if purchased in a pack of four. At 1/6 the price of AirPods, it’s reasonable to anticipate Apple will sell more AirTags than AirPods. Applying a 4x factor yields 380m AirTag units in year five (2025). While 380m units feels aggressive, we believe 120m units in 2025 is reasonable based on a 40% compound growth rate.
Another test of our assumptions is comparing the percentage of iOS users that have adopted AirTag, AirPods, and Watch. The table below outlines this exercise. We’re modeling for each user to have two AirTags on average, with a replacement cycle of roughly four years. Putting it together, this would imply 155m AirTag users in 2025 and 14% iOS penetration, assuming the active iOS user base grows 3% per year from around 1B today to 1.1B in 2025. As a point of reference, this 14% iOS penetration would be similar to the attach rate to date for AirPods at around 15% and Watch at just under 10%.
My take: What sleeper? AirTags are a hit, wide awake and in plain sight.
“Does anyone know where Gramps is?”
But I must admit that I’m a bit confused. Exactly how many people are going to need these things and what will they be using them for?
I have a strong suspicion that I’m out of touch on this one. Everybody seems to think this will be big. Enlighten this poor fool. What’s the big deal?
I’ll take a shot. Every Apple iPhone/iWatch/iPod/iPad user (i.e., portable Apple computer) who has and at times loses/misplaces something can use these. How much have you lost over your lifetime? Me, a lot. Glasses are a favorite of mine to lose, as well as hats. Obviously, glasses won’t generally work, but hats would.
I’ve started using a cane, and I have a favorite. I’ll probably glue one to the handle.
How about tools? Where the heck are those clippers that I love? No more trying to think of a nice way to ask your wife if she just happened to move them….
Also, what a neat little gift. Send them to your portable Apple device friends.They’ll be sure to find a use for them.
Just off the top of my head.
Solution for lost glasses —
https://nomadgoods.com/products/airtags-glasses-strap
Everyone else. Inexpensive key rings.
https://www.belkin.com/us/accessories/c/airtag-accessories/
Tag on.
Xucage Silicone Case Compatible with New Apple Airtags 2021, [2-Pack] Anti-Scratch Lightweight Soft Protective Skin Cover Accessories,White https://www.amazon.com/dp/B09334MB1S/ref=cm_sw_r_cp_api_glt_fabc_VP00FSCGA5W34PVXVZAF
If I had dogs or children, they would be on collars and sewn in jackets (for personal safety and jacket recovery, I lost hundreds of dollars in coats as a child).
Safety and security are about risk reduction. Nothing is fail safe, but at $25 per use case a no brainer in my opinion…….
As for the bicycle, that’s harder since it is easy for some to inspect the bike and look for potential tracking devices. I agree a similar velcro attachment to the underside of the saddle, possibly taped into the handlebars under the bar tape with some padding around it to hide it, hidden inside the gum rubber covers of the brake/shift levers as its thin, or placed inside an under seat/frame travel pouch with other spares like tubes, tools, patches, etc. – although that can be easily removed. An AirTag could be disguised with a round reflector and mounted as if just a light reflector, might escape detection until it beeps? Not sure signals could be detected if inside the carbon fiber tubing of modern bikes.
IF Apple makes the tracking technology available, it’s interesting to think about various kinds of specialized trackers.
Agree w/ Gregg – the 2 tag estimate is low. Many will buy the 4 pack increasing revenue. Plus the add-on key rings, etc. will up the revenue by at least 25% more
Apple will grow this business in ways we can only imagine.
Sooner or later everybody will be sucked in. The magical ring from cupertino looks to temptive to resist.
I’d use two for each. One would be public and have my cell num and ‘reward for return’ engraved on it.
The other would be cleverly hidden. The best of us, would see my cell and return the item for the reward. The worst of us might see the public tag and destroy it in the hopes of stealing my item. Hopefully, they never discover the private tag leading to arrest and a date in court.
But I suspect the AirTags tracking would be sufficiently accurate in -3 dimensions- to make it a lot more feasible for the cops to find the apartment where the item was located.
(Be careful if you go to Lisbon. I got pick-pocketed there a couple years ago, first time in many years of international travel.)