Tech vs traditional audio – a battle that is going down to the wire(less)

By Patrick Montgomery, Analyst at Futuresource Consulting


There is a battle at present within the audio market between tech brands, particularly Google and Amazon, and the traditional audio brands. Big tech has already emerged victorious in the smart speaker field, with Futuresource research showing Amazon and Google comprising 88 per cent of this market, excluding China, which is dominated by Alibaba, Baidu and Xioami.

Audio brands have seen technological advances increase the size of the market, leading to increasing levels of consumer spending on audio products. Despite declining share, audio brand’s volumes remain strong in unit and value terms, but the gains from the extraordinary growth seen in smart speakers is skewed strongly towards tech brands. The focus for audio brands now turns to headphones, as the lurking threat of tech companies crosses over into another dynamic market.

Whilst Amazon provided a new interactive interface of voice assistance in speakers, in headphones Apple were the big tech company behind the disruption in a market which accounts for 55 per cent of consumer audio value worldwide. Its choice to remove the final wires from headphones exemplifies technology bringing consumers one step closer to a ‘seamless user experience’ – the marketing mantra brands are hoping for.

Advanced technological solutions, in both wireless speakers and headphones, have allowed big tech to enter and offer an exciting, yet convenient form factor which unsettled the traditional market. Will Apple’s success be the exception or the rule as more tech firms begin to release their products?

A concern for traditional brands could be that as technology improves there is huge potential for voice assistants to unlock so much of the functionality which we currently rely on from our smartphones. Presently, we see headphones as primarily devices for entertainment consumption. Therefore, it remains to be seen if technologically advanced features such as a 5G supported conversational voice assistant and real time translation are features that consumers are ready for and willing to use.

To what extent are these tech solutions affecting consumer decision making? With the likes of Amazon, Microsoft and Google all releasing their own take on a truly wireless product, are audio companies facing a similar challenge as they previously were in smart speakers?

Advertising has promoted strong audio quality as the leading factor driving consumer buying habits in audio. However, Futuresource has noticed that consumer behaviour is not quite so simple. Looking at the huge spike in Amazon sales every Black Friday and on Prime Day conveys the power of a price cut.

Moreover, according to Futuresource’s Audio Tech Lifestyles consumer research the current growth in true wireless (TWS) can be attributed to factors such as improving comfort, battery life, voice assistants and noise cancellation among others. Each consumer is different, a podcast listener could have vastly different feature requirements to a frequent commuter/traveller. This leads to uncertainty over the influence of each feature and for now it remains to be seen as to which combination of characteristics will dominate the coming decade of listening – alluded to by Harman’s Carsten Oleson at the Futuresource Audio Collaborative 2019 conference, held on 7 November.

Ultimately, smart speakers and headphones will lead to greater content consumption, and the same can be claimed in reverse – consumers insatiable appetite for more digital content (podcasts, audiobooks, music and gaming) is driving demand for hardware. This is beneficial for the entire industry, as audio brands only need to capture a minor percent of this large and rapidly growing market to significantly increase their revenues.