We’re about 2-3 months away from looking like a COMPLETELY different business.

2 massive launches planned.

1 will lift our revenue ceiling by 3-4x.

1 will fundamentally change the business model.

Both have been dreams of mine for years. Wild to see them come to life.

Can’t wait to share more very soon.

Reply with your guesses 👀

— Tom

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The what: A TLDR explanation of the strategy

Bloomberg Intelligence put AirPods at roughly $22 billion in revenue for 2024, up 22% year on year, and around $18 billion a year every year since 2021.

Spin that out as a standalone company and that would make rank AirPods #199 on the Fortune 500.

Apple's Wearables, Home and Accessories segment boasts $35.7 billion in FY2025 and would be #129.

And the product only launched in December 2016.

It’s easy to think AirPods look like a one-time hardware sale, but data shows they’re more like a subscription.

You pay $250 once → then the atrophy begins…

→ The battery degrades hard after about 2 years of daily charging.

→ It's glued in with no user-serviceable swap

Every generation is "essentially disposable by design."

AirPods are a one-off purchase, but are engineered to recur.

The how: The strategic playbook boiled down to 3x key takeaways

The lithium coin-cell in every pair loses meaningful capacity after about 2 years of daily cycles, and Apple has glued it in since generation 1.

You can't cheaply fix the one part that wears out because Apple's battery-service price sits awkwardly close enough to a new pair that most people just re-buy.

And people do re-buy, reliably.

CIRP found AirPods sit on a shorter replacement cycle than the iPhone itself, driven by exactly this mechanism:

AirPods are now one of the most frequently reordered items on Amazon - far from an occasional top-up.

A one-off sale essentially becomes a recurring one, without it ever being called (or considered) a “subscription”.

So a dead battery forces what gets replaced.

But lock-in decides what it's replaced with.

Path of least resistance is another pair of AirPods - it’s the ecosystem argument we’ve all heard before:

Ditching all of it for Sony or Samsung means giving up the whole ecosystem experience, not just the earbuds, and most people never even weigh the trade-off.

Above Avalon estimated 61 million pairs sold in AirPods' first 3 years, with the installed base clearing 100 million people by 2021.

Each one now sits inside a repeating cycle where the only replacement is another pair of AirPods.

That's the flywheel.

Lock-in retains users and also re-sells them the same category every time the battery gives out. And by the time their battery dies out there's 1-2 generations' worth of upgrades that users can jump to.

Honestly. If we zoom out, AirPods stopped changing years ago.

AirPods Pro 1 landed ANC in 2019. (huge)

AirPods 3 added spatial audio in 2021. (also quite huge)

But every generation since has iterated at the margins

→ AirPods Pro 3 (2025) advertises 2x more noise cancellation than Pro 2

→ New generations are listed as "the most secure and best-fitting AirPods ever"

And the "what's new" keeps getting more niche.

→ An FDA-authorised hearing aid mode (for users with hearing loss).

→ A heart rate sensor in Pro 3 (fitness users).

→ 5-language Live Translation (travellers).

→ Sleep-triggered auto-pause (sleep-with-AirPodders).

Each one is real and well-built - each one is just engineered for a narrower slice of the buyer base than the last.

None of it is why someone buys their first pair of AirPods.

But all of it exists to give someone who already owns a pair a few more plausible reasons to buy the next one right around the time that battery starts to show its age.

The where: 3x high-signal resources to learn more

This one’s obviously an opinionated teardown written by the repairability community, but from a strategy/moats PoV it’s quite interesting

The new heart rate sensor is packed in so tight iFixit says there's no realistic way to replace it on its own - and this generation even glues the charging case shut, so the battery in there is just as unreachable as the ones in your ears.

"Essentially disposable by design."

"The wearables business is the size of a Fortune 300 company."

Tim Cook said it at Apple's February 2018 shareholder meeting - back then, #300 on the Fortune 500 was Alcoa, doing about $9.3 billion a year.

By the end of that same year, Cook had already upgraded the line to Fortune 200.

Bloomberg Intelligence's math: AirPods alone did $18 billion in a year - more than Nintendo, more than X, more than eBay or Airbnb's entire annual revenue.

Bloomberg's own follow-up call: at this pace, AirPods overtakes the iPad before the decade's end, becoming Apple's third-biggest product behind iPhone and Mac.

Where the viral "bigger than Nintendo" number everyone quotes originally comes from.

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