Personal Finance

Bloomberg Corroborates Rumors of Apple Premium Headphones

Woman wearing AirPods

Last week, rumors surfaced that Apple (NASDAQ: AAPL) could be working on a new set of high-end over-year headphones in an effort to expand its lineup of audio accessories. The product would be a natural extension of the audio portfolio to follow the success of AirPods and the recent launch of HomePod. KGI Securities analyst Ming-Chi Kuo believed that the headphones could launch as early as the fourth quarter of this year.

Now we're hearing more evidence that these headphones could be in the works, with Bloomberg's Mark Gurman and Debby Wu corroborating the speculation.

Woman wearing AirPods

New high-end headphones would complement AirPods well. Image source: Apple.

Getting a second opinion

According to this morning's report , Apple is indeed targeting the end of 2018 to launch the new headphones, which will be over-ear and feature noise-canceling. The company has also reportedly run into "development challenges" that could jeopardize that target ship date. Product plans can always change and Apple could redesign the headphones or completely cancel them.

In addition to noise-canceling, Apple is expected to include the same seamless pairing technology found in AirPods, which is enabled by Apple's custom W1 wireless chip . The convenience of pairing AirPods, which subsequently automatically pairs them to all other linked devices, is a major selling point of AirPods.

Bloomberg's sources also confirm that Apple is planning to use its own brand for the new product instead of leveraging the Beats brand. The company will probably still keep the Beats brand around, but potentially target lower ends of the market, according to the report. Still, there is some cannibalization risk (not that Apple worries about cannibalization).

Wearables dominates "Other Products"

Given Apple's definition of wearables, which includes wireless headphones/earphones as well as Apple Watch, these new high-end headphones would also fit within that category and could help the company maintain its current momentum.

Wearables represented over half of the entire "Other Products" segment in fiscal 2017, generating $12.9 billion in revenue. Other Products revenue jumped 36% to a record $5.5 billion in the December quarter , driven by wearables growth of 70%. On the earnings call last month, CFO Luca Maestri even noted that wearables are now the "second-largest contributor to revenue growth after iPhone."

That trend should continue going forward, particularly as Apple is now the top dog in wearables thanks primarily to strong sales of Apple Watch, which outsold all competing smartwatches models combined last year.

10 stocks we like better than Apple

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of March 5, 2018

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AAPL

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More