However, despite all this Sacconaghi suggests caution should be in the air, especially if market saturation becomes an issue for Apple. “Given AirPods’ extraordinarily steep adoption curve and rapid saturation of the iPhone installed base, we see a dramatic deceleration in AirPods revenue growth by 2021 or 22, to single-digit growth rates or possibly lower,” he explains.
According to the note, there are roughly 900 million iPhones out in the wild, but only 650 million of them are first-hand, and there is some doubt that people who buy iPhones second hand would be willing to fork over the money needed for a set of AirPods to match. In Sacconaghi’s worst-case scenario, there are probably only 300 million audiophiles, based on his estimates of subscribers to Spotify, Apple Music, and other services, who will actively buy and update their AirPods.
Even in Sacconaghi’s best-case scenario, the drop off in sales would be dramatic. If 2020 sees a 110% increase in unit sales, 2021 may only see a 10% bump, he said.
“The faster they grow, the harder they fall?” Sacconaghi wrote in his note. “Growth tends to slow down a lot once you reach the top of the curve, and AirPods are simply growing so fast today that they risk reaching the top in record time.”