IPhone 7 Design Seen as Another Catalyst to Booming Bluetooth Headphones

Bluetooth headphones’ rise already had bounce before Apple’s move to ditch the headphone jack, which made room for a slightly larger battery in the iPhone 7 and enabled the new water-resistant design. More affordable retail prices, growth in fitness headphone sales and a perception that Bluetooth provides a “decent level of audio quality” and no-wires convenience, propelled the category, said Arnold. A third of Bluetooth headphones on the market are priced $50 or under, he said.

Relative headphone newcomer 1More USA, launched in 2014, is one of the brands with an eye on the market's low-cost segment. CEO Gary Hsieh, a former Foxconn executive “disillusioned with low-value contract manufacturing,” co-founded 1More China in 2013 with a goal to develop a brand that would “dispel the belief that products made-in-China couldn't be of both excellent quality and value,” says the company boilerplate.

Bluetooth signal transmission improvements have made the sound quality from a wireless connection nearly equivalent to a wired connection, 1More Director of Brand and Development David Kellogg emailed us, making Bluetooth headphones a “a lifestyle trend with very [few] consequences.” The company’s iBFree in-ear Bluetooth in-ear monitor comes in red, gray, blue and green at a $49 retail price. An over-ear model sells for $129.

The company is developing Apple-friendly Lightning headphones with what Kellogg called “superior-quality DACs” (digital-to-analog converters) for discerning listeners. On the market divide between wired and wireless headphones, Kellogg said improvements in Bluetooth transmission quality are narrowing the delta between the two, and 1More is working on “high quality multi-transducer Bluetooth in-ears, which will bridge the gap.” Kellogg said Qualcomm’s acquisition of Bluetooth chip maker CSR “will likely lead to an aptX codec update shortly” and 1More is committed to using the most current technology.

Another value brand, Kinivo, announced $44 Bluetooth headphones last week, adding “water resistant” material to its feature list. Music playing through the headphones automatically pauses when a call comes in, one of the features Apple touted with its new W1 chipset that’s designed to enhance functionality across iOS devices. The Kinivo phones have a 25-hour battery life, compared with five hours for Apple’s upcoming $159 AirPods, which deliver more iOS-specific functionality.

At the high end, Armin Prommersberger, senior vice president-technology, in Harman’s Lifestyle Audio division, was unfazed by Apple’s move with the iPhone 7 when we spoke to him about iPhone 7 rumors at IFA, a few days before the launch. “I don’t like cables anyhow,” Prommersberger said. He disputed any correlation between analog cable and sound quality, saying sound quality comes into play with audiophile-grade products such as Harman’s Mark Levinson components in the home luxury products line but not when a smartphone is the music source.

Smartphones, by contrast, have standard output stages and small amplifiers. “That’s the reason why there are high-end MP3 players,” Prommersberger said. “If the amplification is not powerful, you can put Quincy’s headphone on it, and it’s not going to sound any better” than another good headphone “even though Quincy’s has much more potential,” he said, referring to Harman’s upcoming $1,500 AKG N90Q headphones, designed in conjunction with record producer/musician Quincy Jones. By not having to use an analog cable and by having digital access through Lightning to the data stored on the phone, “I don’t do this analog-to-digital, digital-to-analog, analog-to-digital conversion all the time, and I have a perfect amplifier built into my headphone,” he said. “Because it’s powered, for example, from the Lightning, I can have much better sound quality than I was ever able to before.”

On the lower end, where consumers use headphones for exercising or commuting – where sound quality is not as critical due to ambient noise – “there I don’t want to have a cable at all,” Prommersberger said. Although the 3.5mm jack is gone with the seventh-generation iPhone, “it’s going to stay around for quite some time” in the market, he said. “I’m pretty excited about other ways to access the music on my smartphone,” he said of the upcoming world of the jack-free iPhone. “Just because they’re in-ear doesn’t mean they can’t have decent sound quality.”

An NPD study fielded in the days before the iPhone 7 launch found 60 percent of likely iPhone 7 purchasers who expect to buy the phone within the next six months already intended to buy a pair of Bluetooth headphones within that time frame – even before the jack-less design was officially announced. When the prospective iPhone 7 buyers were presented with a visual concept and explanation that the headphone jack on the phone would be removed and they would have the choice of using Lightning-connected headphones with an adapter or wireless Bluetooth headphones, purchase intent for Bluetooth headphones rose to 78 percent, Arnold said. That’s more than three times the purchase intent of all smartphone owners, he said. Arnold called it a “near certainty” that most iPhone 7 buyers will buy Bluetooth headphones.

Arnold cited previous Apple moves that shook the ground in the CE market, including the decline in USB ports and optical drives on Mac PCs and the switch from the 30-pin to Lightning connector on iPhones and iPods. The latter helped launch the nearly $2 billion wireless speaker market, Arnold said. While Apple’s announcement “seems extreme given the legacy of the 3.5mm input, smartphone design has always pushed boundaries,” said Arnold. With Bluetooth now generating a majority of headphone sales, he said, “the elimination of the headphone jack in the iPhone 7 is more of an adjustment to how consumers are listening to music rather than a true shock to the system.”