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Amazon to Launch Earbuds, Up its Game Against AAPL & Others

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Amazon (AMZN - Free Report) continues to look for expansion opportunities in uncharted territories. The e-commerce giant is now looking to foray into the headphones market with plans to launch its first ever headphone in the second half of this year.  

The latest initiative of Amazon holds promise as the global market for headphones and earphones is booming. Per a report from Research and Markets, the market is expected to hit $36 billion by 2024 at a CAGR of 13% between 2018 and 2024.

The earbuds will be wireless and enable users to make hand gestures to change songs, receive and end calls. However, integration of Alexa into these earbuds is the key attraction.

Moreover, by incorporating Alexa feature into headphones, the company is striving to capitalize on the growing need of virtual assistants which make day-to-day tasks easier and faster. Users utilizing the feature will be able to listen to music, check weather updates and most importantly order goods.

Apart from Amazon, tech giants like Apple (AAPL - Free Report) , Alphabet’s (GOOGL - Free Report) Google, Microsoft (MSFT - Free Report) and Samsung are also eyeing this lucrative space. Moreover, traditional earphone makers such as Sony (SNE - Free Report) , Bose and JBL, to name a few have also realized that virtual assistant are becoming mainstream in the headphones space.

Amazon Earbuds to Challenge Apple

Amazon’s upcoming earbud is similar to Apple’s AirPod which incorporates Siri, is likely to give a tough competition to the iPhone maker. Further, they are also likely to look identical. Moreover Amazon earbuds will be devoid of clips and in turn will set inside the ears easily. Additionally, it will come with a charging case like an AirPod.

Notably, Apple which carries a Zacks Rank #3 (Hold) debuted in the smart headphones market long before Amazon. Its first version of AirPods was launched in 2016 and it recently unveiled the second generation of AirPod which directly responds to “Hey Siri” without any hand gesture.

Apple enjoys the first mover advantage with AirPod.However, Amazon’s Alexa which is more popular among users compared with Siri. This is likely to aid Amazon’s momentum across headphone users.

Moreover, Alexa’s open ecosystem remains a key catalyst. Alexa users can access music streaming services like Amazon Music, Pandora, Spotify and even Apple music. This provides Amazon’s Alexa equipped earbuds a competitive edge over Apple’s AirPod.

Apple Inc. Revenue (TTM)

 

Apple Inc. Revenue (TTM) | Apple Inc. Quote

How Google, Microsoft & Others are Placed

Google forayed into the smart headphone market with Pixel Buds which are Bluetooth earphones and equipped with Google Assistant. Users need to just tap their Pixel Bud to check news, weather or to listen to music.

Moreover, the search giant which carries a Zacks Rank #3 is witnessing growing adoption of Google Assistant by headphone makers like Sony, JBL and Bose. Sony’s headphones including WF-SP700N, WH-1000XM2, WF-1000X and WI-1000X, to name a few, feature Google Assistant.

Further, Samsung’s Galaxy Buds allows users to access Google’s voice assistant.

Alphabet Inc. Revenue (TTM)

 

Alphabet Inc. Revenue (TTM) | Alphabet Inc. Quote

Microsoft which has a Zacks Rank #3 also introduced its Surface Headphones. These smart wireless earphones are integrated with Cortana and have noise-canceling feature.

Consequently, the competition in headphone market is intensifying with the emergence of virtual assistants.

Nevertheless, the ordering option via Alexa in Amazon’s earbuds will help the company in gaining popularity among users. Online shopping from anywhere just by using voice command with earbud that fits snuggly in ear provides the company an edge over all the companies mentioned above.

Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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