The once-premium true wireless stereo (TWS) market in India is growing, as smartphone brands fortify their presence
With this segment becoming intensely competitive, differentiation could become tougher for brands.
From being mere accompaniments to smartphones, headphones and earphones have come a long way, and also shed some baggage over time. In the work-from-home and study-from-home scenarios, this category has seen huge growth in 2020, especially led by new technologies such as true wireless stereo or TWS, first popularised by Apple AirPods. TWS earpieces do not have a connector and come with charging cases.
According to Counterpoint Research, shipment of TWS devices in India grew 656% during April-June 2020, with Realme, Xiaomi and JBL accounting for about 57% of the market. Shilpi Jain, research analyst at Counterpoint Research, estimates that the overall shipment for TWS devices in 2020 would cross 10 million.
Apart from companies such as Boat Lifestyle, Vivo, Oppo, Samsung, Sony and Harman International, several technology players from across product categories are eyeing this segment. Boat Lifestyle and Harman International report that 70% of their business now come from wireless (including TWS) earphones. As it is a highly unorganised business, the overall size of the headphones or earphones market is unknown, but experts estimate their shipment size (based on import data) to be 30 million in Q3, 2020.
Hitherto a premium segment, the TWS market has gained mass appeal as brands have introduced products at lower price points. According to Counterpoint Research, while the average selling price of TWS products stood at $104 (roughly Rs 7,400) in 2019, it dropped to $54 (Rs 3,996) in 2020. This is courtesy of the entry of smartphone players such as Realme and Xiaomi, who are known to go after volumes.
“We are targeting consumers who prefer entry-level and mid-range devices,” says Madhav Sheth, CEO, Realme India. Xiaomi’s Redmi Earbuds S, priced at Rs 1,799, and Realme’s Buds Air Neo, at Rs 2,399, were the top-selling models in Q2, as per Counterpoint Research.
Boat Lifestyle, too, has rolled out TWS devices priced as low as Rs 1,299. According to Daman Soni, VP, growth, Boat lifestyle, the company has seen its TWS category grow tenfold in 2020, compared to last year.
It’s a bit of a jostle in the mid-premium to premium segment of this market, too. Harman International is hoping that with the entry of smartphone players, the market will expand, and first-time buyers opting for the entry-level segment will eventually move to premium products. The company has three brands — Infinity (entry level), JBL (mid-premium to premium), and Harman Kardon (ultra premium).
“Our strategy is to educate consumers who are already aboard the TWS bandwagon, and then try to move them to our portfolio,” says Vikram Kher, VP, lifestyle audio, Harman International.
Sony India is also mulling a foray in the value segment. The company has launched four devices so far, priced between Rs 7,000-20,000. It projects that TWS would contribute about 45% to its overall headphone sales in 2020, based on value. The company has changed its channel strategy, with more focus on online sales. “For marketing, too, we used to rely on offline activations; but now we are reaching out to customers through social media,” says Mani Balan, product manager, Sony India.
With this segment becoming intensely competitive, differentiation could become tougher for brands. Experts say that while lowering prices could be a way to woo consumers, it could also translate to lower quality products.
According to Navkendar Singh, research director, IDC India, the difference in the quality of TWS products priced at Rs 1,000 and Rs 20,000 is enormous. “The audio quality is inferior, battery life is lower, and the hardware is not that long-lasting.”
Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY India, says brands need to tap the offline market, too, for this product category, especially when selling products at the higher-end of the price spectrum. “Consumers like to experience a product when paying a premium on it,” he adds.
The prices of these products could drop further, says Jain of Counterpoint Research, as smartphone brands may soon start manufacturing them in India, and would not have to pay the 30-40% import duty. While smartphone brands do appear to have an edge in this category, given their pricing and distribution might, audio brands, too, are capable of bringing out top-notch products, given their expertise.