Open earphones release 'catfish effect', Bluetooth earphone market continues to recover

The global economic growth is slowing down, and the demand for wireless earphones is weak. However, in the segmented field of Bluetooth earphones, non in ear open earphones are becoming a new focus in the Bluetooth earphone market due to their differences in wearing comfort, styling, and other aspects compared to traditional earphones. At the same time, they also bring new growth opportunities to the wireless Bluetooth earphone market.

Recently, a reporter from China Business News learned from International Data Corporation (IDC) that after the rebound in sales of Bluetooth earphones in China in 2023, with a year-on-year growth of 7.5%, the shipment volume of Bluetooth earphones in China reached 55.4 million units in the first half of 2024, a year-on-year growth of 20.8%. Among them, the open earphone market has grown strongly, with a shipment volume of 11.84 million units, a year-on-year increase of 303.6% compared to the shipment volume of 2.93 million units in the first half of 2023. Open earphones are mainly composed of two technologies: bone conduction and air conduction. Air conduction is divided into two forms: ear hook and ear clip. The shipment volume of true wireless ear hook products increased by 1015% year-on-year in the first half of 2024, and the shipment volume of ear clip products increased by 522% year-on-year. The development of bone conduction products with certain technological barriers and specific user groups has entered a relatively stable stage, with a year-on-year increase of 34% in shipments in the first half of the year.

At present, the Bluetooth earphone market is still dominated by True Wireless Stereo (TWS) products, and many industry insiders have stated in interviews with reporters that in the short term, open-ended earphones are unlikely to replace true wireless earphones, but will become the second choice for earphones. Whether open-ended earphones will become mainstream in the future depends on whether they can meet most of consumers' needs in the future.

Overall market growth

After the birth of Apple AirPods, it not only broke the market monopoly of traditional headphone brands such as Sony, Sennheiser, Iron Triangle, AKG in the high-quality audio market for many years, but also brought unprecedented prosperity to true wireless headphone products. However, with the increasing homogenization competition of true wireless earphone products and the launch of more and more open earphone products, open earphones are becoming the biggest highlight of the Bluetooth earphone market.

Recently, the "Monthly Tracking Report on China's Wireless Earphone Market" released by IDC showed that the shipment volume of Bluetooth earphones in China reached 55.4 million units in the first half of 2024, a year-on-year increase of 20.8%. During the same period last year, the shipment volume of wireless Bluetooth earphones in China was 45.88 million units, slightly declining compared to the same period last year. In 2022, the Chinese wireless Bluetooth earphone market experienced a double-digit year-on-year decline. It can be seen that the overall wireless Bluetooth earphone market is recovering from past double-digit growth.

According to IDC data, in the first half of 2024, the true wireless headphone market shipped 35.08 million units, a year-on-year increase of 5.6%, and the overall shipment proportion reached 63.3%. It can be seen that the true wireless earphone market not only still dominates the Bluetooth earphone market, but also shows a growth trend, but it has not outperformed the overall Bluetooth earphone growth rate of 20.8%.

IDC believes that the growth rate of true wireless earphones slowed down in the first half of the year, and with the popularization of active noise reduction technology, product technology barriers have significantly decreased. At present, there is a lack of new technologies that can make consumers perceive differences clearly to drive the market.

The current price war in the true wireless earphone market is fierce, and top manufacturers are accelerating the layout of entry-level products. The promotional policies tied to mobile phones are driving the rapid growth of low-priced products. In addition, small and medium-sized manufacturers are charging prices and technology, resulting in serious product homogenization. Long battery life, deep noise cancellation, and low prices have become the mainstream of the true wireless earphone market. "IDC China Research Manager Dai Qiaochu believes that currently, price decline is still an important factor driving the growth of the true wireless earphone market.

Compared to the fierce competition and slow growth in the true wireless earphone market, the open earphone market is showing a strong growth trend. IDC data shows that in the first half of 2024, open earphones were shipped 11.84 million units, a year-on-year increase of 303.6%.

The growth of open earphones has further captured the market share of true wireless earphones.

The shipment volume of open earphones in the first half of 2024 accounted for 21.4% of the Bluetooth earphone market, compared to only 6.4% in the same period last year. The growth of the open earphone market has also affected the market share of true wireless earphone products to a certain extent. It can be seen that the shipment volume share of true wireless earphones in the first half of 2024 decreased by 9.1% compared to the same period last year. Dai Qiaochu analyzed to reporters that the diversion of open earphone products from the true wireless earphone product market is partly influenced by manufacturers' strategies. Some manufacturers that produce low-priced products directly reduce their investment in true wireless and switch to open products. On the other hand, open products have natural advantages in wearing hygiene and outdoor sports safety.

The reporter noticed that in IDC's previous reports, the main forms of China's Bluetooth earphone market include true wireless earphones, neck worn earphones, and head worn earphones. However, IDC's recent report pointed out that in addition to true wireless earphones, neck worn earphones, and head worn earphones, there are also open top earphones. Open top earphones have even been promoted to the second largest category of Bluetooth earphones in the first half of this year.

In 2021, Oladence publicly proposed the concept of "OWS (Open Wearable Stereo)", which gradually made open headphones a star product in the market. In fact, since 2022, open earphone products represented by bone conduction have shown a strong growth momentum of 124%. In the following two years, open headphones continued to be popular among consumers.

Future mainstream?

From the perspective of participating brands, open headphones can be divided into two categories: emerging brands represented by Oladence, Shokz, and Cleer, and well-known brand players represented by audio manufacturers (Sony, Bose, JBL, etc.) and mobile phone brands (Xiaomi, Huawei, etc.).

Among mobile phone manufacturers, Xiaomi released its first bone conduction earphone at the end of October 2023, while Huawei launched its first ear clip type OWS earphone FreeClip in December. With a novel form design and the help of Huawei's ecosystem to provide lossless sound quality, it has attracted high attention in the market. Other mobile phone manufacturers are still in a wait-and-see state.

So, will open headphones become mainstream in the future? Several industry insiders also analyzed to reporters that open headphones are unlikely to replace TWS's market position in the short term, but will become the second choice for headphones.

Although the open earphone market is growing well and full of opportunities, it also faces a series of challenges.

Canalys research analyst Qin Yiyuan said that as more and more players enter the market, especially for mobile phone manufacturers, they have natural channel and ecological binding advantages, which will have a certain impact on the current competitive landscape and squeeze the survival space of other types of players. At the same time, market education is also one of the challenges. Currently, open headphones are still in the stage of market education, and consumers' awareness of open headphones needs to be improved. However, mature products currently have high pricing and trial and error costs, which makes some potential users adopt a wait-and-see attitude towards trying open headphones.

At present, entry-level products are mostly provided by white label players, which can only meet the basic needs of users. The prices are low but the products are not mature enough, which can easily have a negative impact on market education, "said Qin Yiyuan.

In Dai Zhuochu's view, whether open headphones will become mainstream in the future depends on whether they can meet most of consumers' needs in the future. True wireless can cover various usage scenarios such as commuting, sports, and office work, and it also has the advantage of active noise reduction technology. The most prominent advantage of open earphones is their long-term use, but at the same time, their handling of environmental noise is slightly inferior to true wireless earphones.

Dai Qiaochu said that the development of short videos and audio has gradually increased people's demand for wearing headphones for long periods of time, and at the same time, people's health awareness is also gradually improving. These are opportunities for open headphones, but whether open headphones can achieve good sustainable development also depends on whether they can achieve technological breakthroughs in the future and make up for their shortcomings.