The retail assortments of some consumer electronics categories are big. Some of them are huge. Some of them… are headphones.

gap intelligence recently launched its latest Market Intelligence category, Headphones, which has been gaining a lot of momentum over the past couple of years. As the analyst for the new category, it was important to investigate the current landscape of the market. What I didn’t expect was just how massive this category actually was.

One of the most surprising figures upon launching the category was the sheer volume of different products, with over 5,000 unique headphones currently available in the US. While most of these products are only available within the e-commerce channel, brick and mortar retail still carries a healthy assortment, as shown in the chart below:

Not only is the headphone retail assortment expanding, but research firm IDC anticipates unit sales to increase by nearly 10% per year over the next five years.

So what’s driving the growth in an already well-established category?

Is it possible that lower device prices are making headphones affordable for more consumers? Maybe it’s all of the millennials trying to drown out the wiser generations, and vice versa. Or is it that music is finally good enough to warrant the purchase following the release of Despacito and Old Town Road?

At first glance, there are a few apparent growth drivers for the market. The rising number of mobile devices, increased access to digital content, and the fast-evolving music streaming industry are all strong tailwinds pushing the category forward. However, there are also a few less obvious forces at play.

What’s really driving the category forward?

Headphone jack removal – The disappearance of the 3.5mm audio port from many flagship smartphones has forced consumers to upgrade to wireless headphones and given rise to the true wireless segment.
Voice assistants – The integration of AI features into ear-worn devices opens additional use cases, allowing users to better navigate smart home and smartphone functions
The 800-pound Apple in the room – Although a quick glance at the pedestrians on any city block will tip you off to the size of Apple’s impact on the industry, upon closer investigation this force is mighty enough to warrant a section all to itself.

The Apple Effect


Apple’s headphones and wearables business, bundled opaquely as “Wearables, Home, and Accessories” on its income statement, has perhaps single-handedly shifted the wearables landscape more than any other factor.

The segment also nonchalantly contains the entire product portfolio of Beats by Dre, whose annual revenue of upwards of $3 billion is too insignificant to be broken out by name.

The Cupertino company’s entry into the headphones category following the 2017 launch of the AirPods has been nothing if not a tour de force. The unassuming buds quickly permeated pop culture and acclimated consumers to true wireless technology.

The AirPods were the perfect complimentary product to the iPhone, enabling a more connected consumer while showcasing the brand’s premium yet simplistic design. The AirPods’ hassle-free user experience won the market – not with traditional headphone metrics such as sound quality – but with a new metric altogether: convenience.

During a recent earnings call for Apple’s fiscal third quarter, CEO Tim Cook revealed that if the company’s “Watch, Home, and Accessories” segment was a standalone company, it would be in the Fortune 200. To put that in perspective: the 200th company on the Fortune 500 is General Mills, which had over $15.74 billion in revenue last year. It’s beginning to look like consumers prefer AirPods to even fan-favorite General Mills brands such as Cheerios, Lucky Charms, Pillsbury, and Haagen Dazs, combined.

The Road Ahead(phones)

Guy with headphones.

Looking ahead, the headphones category will attempt to live up to its rosy forecasts and sustain its recent momentum. True wireless earbuds are now household products, familiar to both the eyes and ears of consumers. As audio-centric industries such as music streaming and podcasting continue to increase in popularity, technology giants and small brands alike will be looking to capitalize on the trend. If history has taught us anything, expect wired headphones to be as rare as VHS tapes in just a few short years. They don’t call them the cord-cutting generation for nothing…

For more than 16 years, gap intelligence has served manufacturers and sellers by providing world-class services monitoring, reporting, and analyzing the 4Ps: prices, promotions, placements, and products. Email us at or call us at 619-574-1100 to learn more.