(Bloomberg) -- Apple Inc. is planning an end-to-end overhaul of its AirPods lineup, refreshing a product category that’s emerged as one of the company’s biggest sellers.
The changes will include a revamped version of Apple’s entry-level AirPods in 2024 and a new Pro model the following year, according to people familiar with the plan. The company is updating the products’ earbud design, the look of the cases and audio quality. A new version of the AirPods Max headphones are coming in 2024 as well, said the people, who asked not to be identified because the information is private.
A representative for Cupertino, California-based Apple declined to comment.
The AirPods wireless earbuds were first introduced in 2016, when Apple began removing the traditional headphone jack from its devices. At the time, the product faced skepticism from consumers. Some were miffed about losing the cherished headphone jack. Others worried they would look strange wearing cordless earbuds, which were still a novelty at the time.
But Apple quickly overcame the concerns. The earbuds became one of the hottest consumer technology products, especially as a holiday gift. They’re also a popular add-on purchase when shoppers are buying a new iPhone. AirPods lead the wireless earbuds market, accounting for about 32% of sales last year, according to data from Canalys.
Within Apple, the AirPods are a key part of the company’s Wearables, Home and Accessories segment, which generates about $40 billion annually. That division, which also includes the Apple Watch and Beats headphones, is one of Apple’s fastest-growing and helps keep consumers from defecting to rival product ecosystems.
Apple currently sells three types of wireless earbuds:
- At the low end, the company offers the second-generation AirPods for $129. They debuted in 2019.
- There are third-generation AirPods from 2021 at $169, a mid-tier offering.
- And the $249 AirPods Pro, last updated this year, are Apple’s upscale option.
Apple also sells pricey over-ear AirPods Max headphones. They launched in 2020 for $550 and have never been updated.
The third-generation AirPods haven’t sold particularly well for Apple. Many buyers either opt to save money and purchase the second-generation version or they spring for the high-end model, which comes with noise cancellation. The mid-tier product doesn’t offer much more than the $129 model, so some consumers don’t see a reason to pay the extra $40.
Read More: The Shocking Success of Apple’s AirPods
With that in mind, Apple plans to phase out both the second-generation and third-generation AirPods later next year, according to the people familiar with the matter. They’ll be replaced with two fourth-generation AirPods that are priced similarly to the current versions but are more differentiated.
The two models will feature a new design that looks like a blend of the third-generation AirPods and the Pro model. They’ll both have short stems, the part that hangs out of a user’s ear.
Apple will differentiate the two options by including noise cancellation in the higher-end version. That model will also get an updated charging case that includes speakers for Find My alerts, matching the current AirPods Pro. Those alerts make it easier for users to find their case when it gets lost.
Both new low-end models will offer an improved fit, but it’s unlikely that either will include replaceable tips like the AirPods Pro.
The fourth-generation AirPods will also both switch to USB-C for their charging cases, continuing a shift that began with the AirPods Pro. The company dropped Lightning from its iPhones this year, part of an effort to comply with regulations from the European Union. And its accessories are following suit.
Apple is planning an update to the AirPods Max around the end of next year that also switches its charging port to USB-C. The headphones will come in new colors, but won’t see many other changes. The AirPods Pro, meanwhile, are expected to get a new design and chip in 2025, and the company is working on health features for that device tied to hearing.
Despite the success of the AirPods to date, Apple can’t afford to coast. The company faces growing competition from companies like Samsung Electronics Co., Alphabet Inc.’s Google and Xiaomi Corp.
Sony Group Corp., Bose Corp. and Jabra have also introduced more products in recent years, adding competition at the low end. And as Apple’s own experience in earbuds demonstrates, the market can change quickly.
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