Here’s Where Apple Inc. (AAPL) Dominated Holiday Sales
January 13, 2017, 12:07:02 PM EDT By Brad Moon, InvestorPlace Media
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Headphones are always a popular gift and last year was no exception. What did change in 2016 was the makeup of headphone sales. In December, 75% of U.S. online headphone purchases were wireless this year. And since the launch of its AirPods wireless earbuds, Apple Inc. (NASDAQ: AAPL ) captured over 41% of the wireless headphone market.
Source: Slice Intelligence
Slice Intelligence published a report based on U.S. online shopping for headphones, covering the month of December, 2016. That's the critical holiday shopping month and also, the month that Apple finally launched its delayed AirPods wireless earbuds.
The results show that consumers are ditching the wires and AAPL is quickly dominating the wireless headphone market.
How big was Apple's win? Let's start with traditional wired headphones versus wireless (Bluetooth) headphones.
The Big AirPods Win for AAPL
AAPL took considerable heat last year for essentially forcing new iPhone buyers to make the move to wireless when it eliminated the traditional headphone jack on the iPhone 7 . Based on the Slice data, it seems like there was a lot of unnecessary hand-wringing over that move.
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In the 2015, holiday shopping season, wired and wireless headphones tied for popularity, but in 2016, wireless accounted for 75% of all online headphone sales. That growth represents an overall consumer movement toward wireless headphones - it's much too large a shift to be accounted for just by iPhone 7 sales.
The big news for AAPL is that its first Apple-branded wireless headphones - the Apple AirPods -  sold so well since their release (capturing 26% of sales) that they instantly vaulted Apple into first place as a headphone manufacturer. In fact, the AirPods' Dec. 13 release date became the single largest day for online headphone sales for all of 2016, at more than 10 times the average volume.
When you add in sales for Beats (which Apple owns), APPL's wireless headphones dominance becomes even more impressive. The release of the AirPods took some wind out of Beats sales, but combined, Apple accounted for 41.4% of all online headphone sales in the U.S. during the last two weeks of December.
Second place Bose had 16.1% and third place Sony Corp (ADR) (NYSE: SNE ) managed to capture 4.2% of sales.
Perhaps an even bigger victory for Apple was over rival Samsung (OTCMKTS: SSNLF ). Samsung actually beat Apple to the market with its IconX wireless, Bluetooth earbuds - with built-in fitness tracking and heart monitoring (features Apple's version lacks). According to Slice, since the release of the AirPods, Samsung's wireless headphone sales were just 0.5% of the market.
How Much Money Is There in Headphones?
Apple's big win in holiday headphone sales is a nice bit of positive news after a rather bumpy 2016, but does it actually mean anything? How big is the market for headphones?
It's actually bigger than you might think, and growing. A report by Global Market Insights put global headphone sales (wired, wireless, over-ear and earbuds) at $11.68 billion for 2015 with projections it would grow to exceed $18 billion by 2023 . To put that in some perspective, global smartwatch sales for 2016 were projected to hit $11.5 billion , and that was before sales suddenly slumped mid-year.
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AAPL clearly had an idea that headphones could prove to be a lucrative sideline when it shelled out $3 billion in 2014 for Beats Electronics - known primarily for its popular headphones.
The data from Slice covers U.S. online shopping only and for one month, when people are frantically searching for gifts. That being said, the early success of AirPods bodes well for AAPL in this market. And the popularity of wireless headphones in general helps to validate the company's decision to ditch the headphone jack in the iPhone 7.
Apple clearly isn't going to get rich from headphone sales, but as a sideline business it's doing quite well. While moving an impressive number of units, AAPL managed to dominate the industry veterans in December and completely owned rival Samsung.
As of this writing, Brad Moon did not hold a position in   any of the aforementioned securities.
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