Market Insight

Apple Enters Multi-room Audio with AirPlay 2, but Mainstream Third Party Hardware Penetration Likely to be Limited

June 05, 2017

Paul Erickson Paul Erickson Senior Research Analyst, Service Provider Technology
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Apple announced the AirPlay 2 wireless audio standard at its WWDC 2017 event. The successor to its original AirPlay Wi-Fi based audio standard, AirPlay 2 now enables multi-room audio playback, versus the single source and destination nature of the original.

AirPlay 2 is incorporated into iOS 11, and is compatible with HomeKit, to allow AirPlay 2-compatible speakers to be a controllable device within a HomeKit smart home scenario. AirPlay 2 also enables the use of Siri to initiate and control playback to compatible speakers and devices (such as Apple TV). The also-announced AirPlay 2 API allows third party apps to play to AirPlay 2 devices.

Our Analysis:

AirPlay 2 is Apple’s long-overdue followup to the original AirPlay Wi-Fi-based music playback standard. While Sonos popularized Wi-Fi-based multi-room audio playback, Bluetooth became known for enabling playback anywhere, and competing multi-platform Wi-Fi audio standards spread in popularity, Apple lacked an updated competitive story until its AirPlay 2 announcement.

AirPlay 2 shares some competitive similarities to the competing Chromecast Built-in (aka Google Cast) standard, but based on current announcements it lacks video capabilities and partners with mainstream volume. The latter aspect indirectly infers that there is a third competitive weakness compared to Chromecast Built-in, which is integration cost.

With the arguable exception of Beats and Bose, AirPlay 2’s WWDC-featured third party hardware companies are either at the higher end of the market or with products at the high end of consumer price ranges. If this is indicative of the partner base for AirPlay 2, it is likely that AirPlay 2 shares the same limiting trait that shackled AirPlay: cost. 

As AirPlay possessed a significant cost adder thanks to a limited number of relatively expensive wireless chipsets officially approved to support it, the inexpensive nature of Bluetooth as well as Wi-Fi-based alternatives in Spotify Connect and Chromecast Built-in (Google Cast) allowed much of the market to leave AirPlay behind in mainstream price bands. In today’s competitive environment filled with ways to play music wirelessly, AirPlay 2’s main benefit is in its built-into-iOS convenience – substantive feature-wise it offers merely parity. AirPlay 2’s fortunes in terms of mainstream penetration into the third party hardware landscape will lie in whether or not Apple solves the issue of the cost adder for enabling AirPlay.

Otherwise, consumers have proven, and manufacturers have witnessed, that companies do not need AirPlay to either be successful or to reach iOS-based customers. Additionally, models supporting cross-platform standards such as Bluetooth, Spotify Connect, and Chromecast Built-in, will be of greater interest to manufacturers seeking to reach a maximum available market, versus a niche higher-cost product targeting only iOS consumers.

In this environment of established consumer familiarity with inexpensive, “good enough” solutions, it is unlikely that AirPlay 2 will reach the level of inclusion in third party hardware strategies as the original. Instead, it is expected that AirPlay 2 will largely remain a niche proposition for consumers able to afford high end peripherals – those devices with a high enough total bill of materials cost able to absorb the AirPlay wireless chipset cost within.

Lastly, Apple noted that AirPlay 2 speakers are able to be added as controllable devices in HomeKit households. This implies that the only audio output devices that are going to be available as a common audio resource within the HomeKit smart home, are going to be AirPlay 2 compatible speakers and devices. Apple's lock-in play with AirPlay 2 may run much broader than simply multi-room music playback.

 

 

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