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We believe that the AirPods are more than just earbuds for Apple and will become increasingly important in Apple's ecosystem for the following reasons. (1) They increase the switching costs for users to Android from the iOS ecosystem. (2) This is an important device for voice assistant/AI services because it can easily enable the voice assistant. (3) The ear is a perfect sensing area for detecting various health data. It may integrate with the Apple Watch to offer better health management in the future.With smartphone shipments slowing, more brand vendors are said to be paying attention to wireless earbud sales as a way to generate growth in the near-term, with a view to long-term strategic improvements in the ear-device space, according to Kuo.
We believe that AirPods' success has drawn Google and Amazon's attention and these two companies will launch AirPod-alike products in 2H19. The combined shipments of two brands will likely reach 10–20mn units in 2H19. Goertek (assembly) and Unitech (Rigid-flex PCB) are sole suppliers for Google and Amazon. We think that Google and Amazon are Apple's main competitors because Google is the most influential brand in the Android ecosystem and Amazon has the best voice assistant service.Earlier this week, Kuo said he expected Apple's AirPods to see "dramatic growth" over the next two years, with new AirPods with a wireless charging case to debut in the first quarter of 2019, and an "all-new design model" following in the first quarter of 2020.