“When I was your age, there were these little white earbuds…”
If Apple transformed the market for portable music, Beats Electronics is transforming the market for its most important accessory. According to recently-released data from NPD Group, 43 percent of all headphone purchases now involve price tags above $100, with plenty soaring into the $350+ range. Overall, NPD estimates that Beats now controls 51 percent of a premium headphone market now estimated at $1 billion in the US alone.
Like most things in this space, the high-end headphone story isn’t happening in isolation. Instead, NPD draws a strong connection to the booming tablet market: this year, the research group found that 29 percent of higher-end headphones were being connected to tablets, up from 16 percent last year.
It’s almost as if better quality mobility begats better quality headphones, especially amongst those with the cash to dispose. “As consumers shift more consumption to mobile devices, and tablets in particular, quality headphones are a logical addition to the hardware profile,” explained Ben Arnold, director of industry analysis at NPD. “By adding better quality sound, premium headphones can enhance the overall content experience for users of these devices.”
The takeaway is rather harsh: fans will fight tooth-and-nail against a $9.99 album purchase, but they’re more than happy to surpass $99 on a pair of fashionable headphones. Or, much, much more: the NPD study also found that the average, premium headphone user owns 2.3 pairs of high-end headphones, suggesting rapid replacement and intense opportunity for specialization (ie, bass-heavy, workout-friendly, celebrity-emblazoned). And, lots of room for other heavyweights like Skullcandy.
Step outside the ecosystem of technology, and there’s also the highly successful branding story. Indeed, Jimmy Iovine’s brilliance at alchemizing celebrity into profits has extended into consumer electronics, and everyone from rappers to Olympic athletes are now voluntarily sporting Beats. That, according to NPD, is translating into serious profits.
“Though many consumers are gravitating towards more expensive, premium headphones for better quality sound, the emphasis on design and celebrity endorsement have also contributed to them being viewed as fashion accessories. Thirty-eight percent of premium headphone owners say their device is part of their personal style and one-in-four say it is important that their headphones are fashionable.”
The question is where the once-ubiquitous white earbud fits into this upgraded picture. The streets of places like New York used to be a sea of white cords, but even Apple is moving ahead: during its iPhone 5 announcement Wednesday in San Francisco, the company unveiled EarPods. These next generation buds will come packaged with the iPhone 5, but they’ll also be quickly cast aside by upgrading buyers.