Apple’s success for the headset will depend on ecosystem integration

Render of Apple’s upcoming headset

Reports suggest that shipments of Apple’s upcoming headset may be aimed at developers with a limited production run, at least for the first year. It may also only attract serious buyers due to its high price.

To determine the market’s response to the new product, the latest report from Consumer Intelligence Research Partners (CIRP) examines the potential adoption rate of the AirPods and Apple Watch. As wearables, these products act as accessories for the iPhone, and the Reality headset could work similarly.

For example, about 40% of iPhone owners also have Bluetooth headsets and about a third have a smartwatch. Apple has a significant share of the market among iPhone owners who own a Bluetooth headset or smartwatch.

About 60% of iPhone owners with a Bluetooth headset own AirPods, while more than 75% of iPhone owners with a smartwatch own an Apple Watch. Therefore, CIRP expects consumer adoption of the Reality headset to closely resemble the adoption patterns observed for these products, particularly the Apple Watch.

Bluetooth Headset and Smartwatch Penetration of iPhone Owners and Apple’s Market Share of Device Owners (Twelve Months Ending March 2023)

Apple can expect significant market share within a relatively narrow headset consumer base. But that may depend on how well it fits into the Apple ecosystem, particularly the iPhone.

AirPods connect easily to the iPhone, while the Apple Watch integrates with the next-level iPhone experience, with functionalities such as health tracking, notification management, and other features. The ease of connectivity with other Apple devices may be a driver for adopting the headset, whether it functions as a standalone device or as an accessory for the iPhone.

The price of the Reality headset is also a major concern. At $3,000, it would be about three times higher than its premium competitors and more expensive than most other products offered by Apple.

“The last time Apple tripled a competitive market price was with its HomePod smart speaker,” CIRP writes. “After nearly five years in that market, Apple is a distant third behind Amazon Echo and Google Home.”