Apple May Be Looking to Expand AirPod Lineup This Year

Following on the breakout success of AirPods, Apple may soon expand the lineup to include a wider range of form factors and price points.
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A new version of AirPods is on the way, according to the Apple rumor mill. 

Apple is looking to release new AirPods as soon as May, wrote Apple tipster Jon Prosser on Twitter over the weekend. The new AirPods, informally dubbed AirPods 3 for now, would arrive seven months after the AirPods Pro that Apple released last October. 

Apple  (AAPL) - Get Report shares closed 2.08% lower on Monday to $276.93.

Close Apple observers note that, given some of the company's recent moves, an expanded AirPods lineup wouldn't be surprising. 

Apple showed it was serious about audio technology when it bought Beats by Dre for $3 billion in 2014; and more recently, it's made other investments in homegrown audio tech, building a sound lab in the company's Cupertino headquarters and hiring more audio-focused engineers. 

"I think the AirPods might have been a hit beyond even Apple’s expectations; the AirPods took off and became a meme, and they've sold tons of units," said Rene Ritchie, longtime Apple analyst and editor of the blog iMore. "I think they now believe they can sell more units with the Apple brand than with the Beats brand, so it looks like they'll be expanding that product lineup." 

Apple has also been rumored to be working on an entry-level version of AirPods that would sell in the range of $150 and up. The AirPods Pro, which come with noise cancellation and other new features, sell for $250 and up. 

Apple management has touted the breakout success of the AirPods lineup: Its wearables, home and accessories segment generated $10 billion in the December quarter, representing about 11% of Apple's overall revenue. The company sold 60 million AirPods in 2019, according to research firm Strategy Analytics. 

Apple may also look to expand AirPods pro into new form factors, such as an over-the-ear version oriented towards sports use, said Ritchie. 

Apple's wearables carry a higher margin profile than its other devices, so continued high growth in the segment would be positive news for Apple investors in an otherwise grim-looking year for hardware sales. 

Sales of Apple's main cash cow, the iPhone, are expected to take a substantial hit this year amid supply and demand pressures tied to the coronavirus pandemic. 

Year to date, Apple shares have fallen about 8%.