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Technological maturity is expected to promote the rapid development of TWS headphones
Since Apple officially launched the wireless headset AirPods, True Wireless Bluetooth Smart Headset (TWS) has attracted wide attention in the market for its wireless, intelligent, small size, good sound quality, efficient connection and stability. In recent years, Samsung, Huawei, Millet and other mobile phone manufacturers, as well as Bose, Sony, Sennheiser and other headphone manufacturers, have entered the TWS headset market. TWS headphones are mainly composed of chips, speakers, microphones and multiple sensors. We believe that the development of Bluetooth technology upgrade, chip scheme diversification, mobile phone structure change, system support and other technologies will help to promote the maturity of TWS headphone ecosystem. Sensors and AI technology will promote the diversification of TWS headphone application scenarios, and bring prices with the maturity of technology. Down, TWS headphones will usher in rapid popularity. According to IDC data, the global TWS headset shipment reached 65 million units in 18 years, and the market size exceeded 5 billion US dollars. It is expected that the sales and market size of TWS headphones will more than double in the next three years, which will become the mainstream of the headset market.
The development prospects of intelligent speakers are promising
In the past two years, more and more technology manufacturers have joined the smart speaker market. 18Q3 has shipped 19.7 million smart speakers worldwide, an increase of 137% over the same period of last year, and its annual sales are expected to be close to 100 million. We believe that the continuous improvement of core technology maturity is the core driving force for the continuous and rapid growth of sales of intelligent speakers in the future. Improving sound quality is still the primary factor for the development of intelligent speakers. Improving the development of voice recognition, AI and other technologies and further integrating the content platform of intelligent speakers will help expand the customer base. With the improvement of smart home ecosphere and the maturity of related software and hardware technology, the smart speaker market is expected to maintain rapid growth in the future. It is estimated that the global smart speaker shipment will exceed 300 million units in 2022, and the market scale will reach 60 billion yuan. China has become the world's second largest smart speaker market, with 18 Q3 deliveries of 5.8 million units, and domestic suppliers have also occupied a larger share in all aspects of the smart speaker industry chain. In the future, high-tech maturity and low-cost production are the direction of joint efforts of supply chain manufacturers. At the same time, with the rapid increase of smart speaker sales, it is expected to usher in sustainable development.
Speakers and microphones usher in a new round of development opportunities
As the core components of TWS headphones and smart speakers, speakers and microphones are expected to benefit from the rapid development of new smart audio devices, and the technical upgrading of these core components has become the driving factor for the further popularization of terminal devices. The upgrading of loudspeaker technology is mainly embodied in scheme upgrading, material upgrading, waterproofing and consumption upgrading, which brings about the continuous growth of the value and market space of single machine. It is estimated that the global sales of micro loudspeakers will reach 15.2 billion in 2021. The two giants of electro-acoustics, Gore and Raytheon, have the leading technological innovation and R&D strength of loudspeakers, and are expected to continue to lead the technological development direction. With the advantages of integration, expansibility and stability, microphones are expected to be widely used in smart products such as mobile phones, headphones, speakers and so on. Miniaturization and array are the direction of technology development. It is estimated that the shipment of microphones will reach 8 billion in 2022, with a compound growth rate of 11%. With the technical reserve of microphones, Gol, Lou's and Raytheon will become the world's leading microphone factories. In the future, with the continuous upgrading of microphone technology and the growing market size, leading companies are expected to further consolidate their leading position in the world.
1 TWS Headphone Development Prospect is Optimistic
In 2016, Apple announced that the 3.5mm headphone interface was cancelled and the wireless headphone AirPods was officially launched, which promoted the change of the headphone industry. Since then, AirPods has been sought after, with delivery cycles reaching six weeks, once short of supply and demand. The booming sales of AirPods have officially opened the market for TWS (True Wireless Stereo) real wireless Bluetooth smart headphones, and "wireless" has become the most concerned headphone feature of consumers.
The biggest feature of TWS headphones is wireless, so people don't have to worry about the winding of headphone wires anymore. Relying on integrated optical sensors, TWS headphones can be automatically connected and used from the headset box, and the automatic switch is very convenient. At the same time, compared with ordinary Bluetooth headphones, TWS headphones are small, sound quality is good, and the application of more advanced Bluetooth technology makes them connect more efficiently and stably. It also has a certain degree of waterproof and intelligence, so it quickly attracts the attention of consumers.
Headphones have become irreplaceable electronic products because of their good portability. The emergence of smart headphones has increased the use of headphones, and quickly attracted consumers and occupied the market. In China, Apple AirPods has continuously entered the top ten headphones in Zhongguancun statistics after its release, and even won the first and second positions many times. According to Slice Intellegence, AirPods accounted for 26% of U.S. online headset sales a month after its launch in 2016, representing consumers'recognition of TWS headphones. In recent years, more and more manufacturers have launched new products to enter the TWS headphone market.
TWS headphones are mainly composed of chips, speakers, microphones and multiple sensors. AirPods integrates 28 components and hundreds of components, which greatly increases the complexity. AirPods automatic switch mainly depends on optical sensors, and relying on a variety of other sensors, TWS headphones can also achieve motion detection, health monitoring and other functions. The two headphones can be divided into main speaker and secondary speaker. The main speaker receives audio signals from devices such as mobile phones and computers, and transmits them to the secondary speaker to achieve stereo effect. At present, high-end headphones on the market have two main speakers, so both can be used independently; while low-end headphones have only one main speaker, so only one headphone can be used independently and receive calls.
1.2 TWS is expected to become the mainstream in the future
According to IDC, headphones will be the fastest growing wearable device, with a composite growth rate of 56% between 2018 and 2022. According to the Futuresource report, Q3's global headset market in 2018 grew 26% compared with Q3 in 2016, reaching $5.5 billion. AirPods accounts for about 40% of the market share. We believe that the upgrade of core technologies such as Bluetooth technology, chip solutions, mobile phone structure changes and system support, along with the maturity of AI and sensor technology, are expected to promote the rapid and sustainable development of TWS headphones. It is expected that the sales of TWS headphones will more than double in the next three years and will become the mainstream of the headphone market.
1.2.1 Bluetooth Technology Upgrade, Diversified Chip Solutions
Bluetooth technology upgrades enhance the use of wireless products such as TWS headphones. In 2016, Bluetooth 5.0 technology standard was released, which laid the foundation for the popularization of TWS headphones. Compared with the previous generation of technology, Bluetooth 5.0 has lower power consumption; the coverage radius is 300 meters, which is 4.2 times of Bluetooth; the transmission speed is up to 24 Mbps, which is twice as fast as Bluetooth 4.2; and indoor positioning can be achieved with WIFI. Bluetooth Mesh technology also breaks the tradition and achieves "many-to-many" device-to-device signal transmission.
For TWS headphones and mobile phones, advances in Bluetooth technology will improve the stability of device connections, reduce latency, and low power characteristics can also prolong the use time of devices. In addition, the application of Bluetooth 5.0 technology will enable TWS headphones to make bilateral calls, that is, both headphones can be used as main speakers.
According to statistics, since the second half of 2017, the mainstream mobile phone brands have launched more than 50 flagship models supporting Bluetooth 5.0 transmission, laying out the future applications of Internet of Things and smart devices, and laying the hardware foundation for headphones using Bluetooth 5.0 technology.
With the upgrading of Bluetooth technology, chip companies have actively launched diversified TWS headset schemes in recent years. According to statistics, by June 2018, six companies had launched 10 TWS headset schemes. By November, eight chip companies had launched 18 TWS headset schemes, of which 13 supported Bluetooth 5.0 transmission. The integration of these chips is further improved, such as Qualcomm CSR8675, which is the first flagship Bluetooth audio system-level chip integrated with ANC function, saving the space inside the headset. These solutions also support low power consumption, low latency, noise reduction, environmental sound monitoring and other headphone functions, reduce latency, improve sound quality, make TWS headphones more functional, better performance, and improve product experience. In the future, chip manufacturers are expected to introduce more technology and performance improvement programs.
1.2.2 Mobile phone structure upgrade, system support to promote wireless headphones
Apple previously said that the 3.5mm headphone interface was cancelled to save the internal space of the phone. According to the disassembly report, the space saved by removing the 3.5mm headphone interface was used to increase battery capacity, add waterproof components, Taptic Engine, and add a voice transmission device and two speakers. Since then, more and more mobile devices on the market have cancelled the 3.5mm headphone interface and used Lightning or Type-C interface to connect headphones.
At the same time, after Apple's iOS system and AirPods took the lead in seamless matching, Android announced its support for TWS headphones. The TWS headphones launched by Android mobile phone brands have been adapted to the system. We believe that the structural changes of mobile phones and the perfect support of the system have promoted the development of Bluetooth headset market.
1.2.3 Sensors and AI Technologies Promote Wide Application Scenarios in the Future
With the further development of technology, TWS headphones may gain more market space in industry, medical, ToB and other fields in the future. Apple patents show that in the future, headphones may carry heart rate detection technology and integrate more sensors to monitor heart and blood pressure functions. Another patent describes a technology that allows users to control ambient sound by relying on sensors and microphones, which can even regulate ear pressure. The future direction of TWS headphone technology upgrade may also be the integration of capacitive sensors - Apple patent shows that headphones integrated with capacitive sensors can detect the touch of users'fingers to perform operations.
Voice interaction is the preferred alternative to screen and keyboard. Supporting AI voice assistant as an extension of mobile phones is undoubtedly the biggest selling point of TWS headphones. At present, most of the TWS headphones launched by major mobile phone manufacturers support their own voice assistants. In addition, traditional headphone manufacturers have launched TWS headphones that support mainstream voice assistants such as Apple Siri, Amazon Alexa and Google Assistant. In 2018, Amazon released the Alexa Mobile Accessory (AMA) development kit for all device manufacturers. All manufacturers can integrate Alexa voice assistants into their products. Qualcomm will work with Amazon to launch an Alexa smart headset solution that allows users to use Alexa without installing App.
1.2.4 Technology Maturity Promotes Price Decline
The maturity of TWS headphone technology has been increasing, which has pushed down the price of products. Most TWS headphone products on the market before 2018 cost more than 1,000 yuan, such as Apple AirPods, Samsung Gear Icon X, B&, O Beoplay E8 and so on. In the first half of 2018, products with prices below 1000 yuan increased, such as Huawei Freebuds launched in March, Meizu POP launched in April and Walker TWS3 launched in June at 799 yuan. In the second half of 2018, some brands tried to occupy the market by introducing low-price products. QCY T1 Youth Edition launched in September sells for 129 yuan and preemptively purchases for 99 yuan, but the subsequent T1 Upgraded Edition sells for 299 yuan. Mammy also launched two products in September, Mammy W1 and Mammy AI, which cost 99 and 299 yuan respectively. Although the overall market has not entered a mature period, the application of new technologies will still increase the price of TWS products, but the improvement of technology maturity will promote the overall trend of price decline, and also help TWS headphones to achieve rapid popularization.
2 Intelligent speakers are expected to become new growth momentum
2.1 Locate the entrance of smart home, the development prospects are promising
Amazon successfully launched Echo smart speakers in 2014. Since then, the market of smart speakers has developed rapidly. Major manufacturers have launched smart speakers products one after another. Comparing with traditional speakers, the biggest feature of intelligent speakers introduced by companies is that consumers can use voice-controlled speakers to connect to WiFi and use the Internet to provide users with a variety of functions. Through AI voice assistant, smart speakers can also be used in automobile, mobile phone, television and other fields in the future, and the advent of 5G era can also make various smart devices wireless interconnection, providing consumers with more rich experience. Therefore, with the development of smart home and the upgrading of core technology, smart speakers are expected to break away from smart phones, and the ecosystem built by AI voice assistants will gradually become the entrance of smart home.
In July 2015, Amazon Echo was officially listed and immediately attracted wide attention. After gaining a certain market, Amazon launched a low-cost, smaller product (such as Echo dot) in March 2016, which not only gives consumers more choices and market share, but also attracts consumers to buy more smart speakers and place them in every corner of the house. These smart speakers will form a system to expand the scope of picking up users'voices, which also increases the frequency of users using smart speakers. Ideally, users can control smart speakers through voice in any room, and then control other smart homes. According to Edison Research, more than half of users have more than two smart speakers. At the same time, in the past two years, more and more technology manufacturers have joined the smart speaker market.
Amazon Echo uses seven microphones, a tweeter and a bass speaker, and has a mute key at the top to support multiple applications and compatibility with multiple devices. Apple HomePod uses six microphone arrays, a bass speaker and seven tweeters at the bottom, which greatly improves the sound quality. Apple users can control HomePod directly through Siri and adapt to all Apple devices.
With the approaching of 5G era, interactive products will grow rapidly in the future. According to Strategy Analytics, the smart home market will grow dramatically in the future. In 2018, global consumers will spend $96 billion on smart home-related products, with about 189 million households using them. By 2023, it is expected to generate sales of $155 billion, and households using related products will reach 293 million. With the continuous growth of smart home market, the application of smart systems is also indispensable. These smart devices will form an ecological circle around voice assistants. Voice interaction has become the preferred alternative to screen and keyboard. AI voice assistant will play the most important role in this ecosphere. As a recognized gateway to smart home interaction, smart speaker has great potential for future development.
2.2 Technological maturity is the core driving force for the rapid growth of sales of smart speakers
In 2017, 32 million smart speakers were sold, of which 22 million were sold by Amazon Echo, but limited by language, the market share was mainly concentrated in English-speaking countries. Q3 global smart speakers shipped 19.7 million units in 2018, an increase of 137% year-on-year, and the annual sales are expected to close to 100 million units. The Chinese market has maintained rapid growth since Q4 in 2017. Q3 shipments in 2018 amounted to 5.8 million units, making it the second largest market in the world. According to Deloitte, the penetration rate of smart speakers in urban areas of China reached 22% in mid-2018, compared with 20% in the United States. With the improvement of smart home ecosphere and the maturity of related software and hardware technology, the smart speaker market is expected to maintain rapid growth in the future. It is estimated that the global smart speaker shipment will exceed 300 million units in 2022, and the market scale will reach 60 billion yuan.
In Q3 China's smart speaker Market in 2018, Alibaba's Skycat Elves accounted for 29% of the market share, while Millet and Baidu accounted for 25% and 24% respectively. Amazon Echo accounted for 32% of the global market, followed by Google Home for 23% and Ali, Baidu and Millet for 9.5%, 8.4% and 8.4% respectively depending on China.
With the maturity of intelligent speaker technology, which is more conducive to manufacturers to control costs, the domestic intelligent speaker market is now relying on low-price strategy to open the market. Major manufacturers have launched smart mini speakers with lower prices, and adopted the strategy of subsidized price reduction, in order to obtain more customers: during the Double Eleventh Period in 2017, the price of Skycat Elves dropped to 99 yuan, with sales reaching 1 million units; the price of mini speakers for Millet Mini is 169 yuan, and the promotional price for April 2018 is 99 yuan. After that, the promotional price of Tianmao Elf Sugar and Xiaodu Intelligent speaker remained 89 yuan for a long time, 299 yuan for Xiaodu at home during the Double Eleventh Period of 2018, and nearly 1000 yuan for Baidu to sell a Xiaodu at 299 yuan. At present, Ali, Millet, Baidu and Jingdong almost completely occupy the domestic market, so it is expected that in the short and medium term, low-price strategy will still be the main way to promote smart speakers. But in the long run, the price war will be difficult to sustain for a long time, and may restrain consumer demand: on the one hand, most smart speakers are sold at cost or even at a loss, so that smart speakers continue to have limited room for substantial price reduction; on the other hand, for low-income people, only smart speakers with strong practicability and functionality can stimulate purchasing willingness.
Although the domestic market is growing rapidly, less sophisticated technology has kept more consumers on the sidelines of smart speakers. GfK survey found that consumers are not fully satisfied with the features of intelligent speakers, such as semantic recognition, voice wake-up and so on. Influenced by the cost, most of the intelligent speakers in the market are not good enough in sound quality, and the product homogenization is serious, which is also one of the reasons hindering the expansion of the market. Deloitte's research and development found that the practicability and functionality of intelligent speakers depend to a certain extent on the way people actually use them. In most markets, intelligent speakers are still most commonly used to play the normal essential functions of music, while auxiliary functions such as weather query and information search bring additional value to intelligent speakers.
Therefore, we believe that the continuous improvement of core technology maturity is the core driving force for the sustained and rapid growth of smart speaker sales in the future! Improving the sound quality is still the primary factor in the development of intelligent speakers. Promoting the development of speech recognition, artificial intelligence and other technologies, and further integrating the content platform of intelligent speakers will help expand the customer base. At the same time, the popularization of smart home ecology in the future is expected to promote the growth of sales of smart speakers.
2.3 The trend of localization of industrial chain is clear
The production of smart speakers involves chips, microphones, audio amplifiers, codecs, loudspeakers and OEM manufacturers, among which microphones and loudspeakers are the core components of audio products.
Intelligent speaker scheme is mainly provided by Acoustic Intelligence Technology, Pioneer Interconnection, Moore Acoustics and other companies, including speech recognition, microphone array, hardware design and other aspects of design. Intelligent speaker chips are mainly manufactured by chip manufacturers such as MediaTek, Amlogic and Quanzhi Technologies, among which MediaTek has occupied more than half of Echo's chip share. At present, most chips are compatible with multiple platforms and network protocols. ODM companies such as Foxconn, Guoguang Electronics, Walkers, Fenda Technologies, etc. work for many brands. Generally speaking, the domestic brand occupies a larger share in the industry chain of smart speakers, while the domestic brand of smart speakers mostly chooses the domestic component brand to control the cost. Driven by low-cost product promotion, high-tech maturity and low-cost production are the direction of supply chain manufacturers'joint efforts.
3. Speakers and microphones are expected to usher in a new round of development opportunities
As the core components of TWS headphones and smart speakers, speakers and microphones are expected to benefit from the rapid development of new smart audio devices. The technological upgrading of such core components has also become a driving factor for the further popularization of terminal equipment.
3.1 Sound quality is the first element of acoustic products, and speakers still have potential for sustained growth.
From smartphones to TWS headphones to smart speakers, sound quality performance has always been one of the most important factors that consumers pay attention to. The upgrading of loudspeaker technology is mainly embodied in scheme upgrading, material upgrading, waterproof and consumption upgrading, which brings continuous growth of the value and market space of a single machine.
In smartphones, speakers still have upgrade space, and stereo sound quality performance is further improved. The application of new materials will be the key layout direction of the planners. Speakers made of ultra-thin, transparent and conductive nano-films can work by generating thermal sounds from temperature-induced vibration, making them an alternative material for wearing loudspeakers. The new ultra-thin ferroelectric electret nanomaterials developed by Michigan State University can be used for both microphones and loudspeakers, and can even turn a flag into a loudspeaker.
Super Linear Structure (SLS) technology can produce loudspeakers with better sound quality. At present, the SLS technology platform of Raytheon Technology has been put into use. It has shown related products to customers of smart phones, smart speakers and other products, and the market penetration has been increasing. The superlinear loudspeaker uses two coils to drive the diaphragm together, which solves the problem that the force of the diaphragm is unbalanced and affects the sound quality. The graphene vibration film with superior performance has been applied in some commercial products, and a new generation of vibration film is also being developed.
Due to the asymmetric structure and production process of the micro loudspeaker, the polarization of the vibration film will occur in the application. Polarization will lead to fatigue, rupture and coil deflection, which will affect the sound quality. Therefore, many companies have filed many patent applications for speaker polarization. Gore Acoustics has introduced a new type of diaphragm material to produce better performance electroacoustic components. Beginning in 2016, the layout, innovation and polarization issues of the Super Balanced Speaker (SBS) are integrated with high-performance diaphragm materials, which reduces the noise generated by mobile phone vibration and provides better stereo and waterproof performance. At present, SBS loudspeakers have been used in many high-end models such as Huawei, OPPO, millet and so on.
Device waterproofing is the performance that users generally expect. The iPhone 7 is Apple's first waterproof mobile phone product. It uses a special waterproof filter and fits the sound hole. Huawei Mate 20 combines bottom speakers with Type-C design, which reduces fuselage openings and increases waterproof performance. In addition, the integration of speakers and antennas and other devices is also one of the solutions proposed by manufacturers to save space and improve waterproof performance. In the popularization of TWS headphones, waterproofing will also be an important upgrade direction of loudspeakers.
In addition to technical upgrades, increasing the number of speakers is one of the ways to achieve better stereo effect. After removing the headphone interface of the iPhone 7, Apple added a speaker at the top of the phone to make the phone a dual speaker product. The iPad Pro began to use four speakers, and the latest Apple patents show that the future iPad may use eight speakers. Amazon Echo uses a dual speaker design, while Apple Homepod uses a bass unit and seven tweeters to form an array. Therefore, the number of speakers used in future products may continue to increase. According to China Industrial Information Network, global sales of microspeakers will reach 15.2 billion units in 2021, with an annual compound growth rate of nearly 6%.
3.2 The performance advantages of the microphone are obvious.
The principle of capacitive microphone is that the distance between the diaphragm and the fixed backplane changes with the sound pressure wave, and then changes the capacitance, so that the sound signal can be converted into electrical signal. The traditional ECM microphone is made of electret material, while the microphone is composed of a micro-electromechanical chip and an ASIC chip. All the components are made on a silicon wafer.
Compared with the traditional electret capacitive microphone (ECM), the microphone has better integration and expansibility, so it has been widely used in smart phones, headphones and other devices. Under the influence of different environmental factors such as temperature and humidity, the microphone has more stable performance and better anti-interference performance to radio frequency.
Miniaturization is one of the main directions of microphone technology development. Earlier, Gore acoustics has proposed a solution to integrate microphone with pressure sensor, microspeaker and antenna module, which can effectively save space and reduce costs. Apple has applied for a new patent for integrating a microphone with a vibration sensor, which can effectively reduce noise. In the future, more modular integration technologies may be introduced to meet the development trend of smaller size, higher performance and more functions. In addition, low power and high performance products are also one of the unchanged trends.
The silicon diaphragm of the microphone used at present may break due to excessive pressure. The characteristics of graphene make it suitable for Microphone Applications and show higher sensitivity. At present, Infineon has cooperated with a number of companies and universities in the development of graphene thin film microphones, and has announced the completion. In the future, the graphene film microphone may enter the market.
Piezoelectric microphone may be another development direction, which uses the deformation of crystal with piezoelectric characteristics to drive piston in electric field. Compared with capacitive microphone, piezoelectric microphone can provide better far-field performance, less environmental pollution and better long-term performance. When applied to smart devices, the piezoelectric microphone hardly consumes electricity before the wake-up word is turned on, which will increase the duration of the device. In May 2018, Vesper, the developer of piezoelectric microphones, announced the completion of the B-round financing. Investors including Alexa, Baidu, Bose and other well-known companies showed market confidence in this technology.
Compared with single microphone, microphone array technology can realize voice enhancement and sound source localization, which is one of the indispensable technologies for intelligent products. Microphone array technology enables smart speakers to recognize far-field voice, and consumers do not need to call voice assistants through keystrokes. Source localization enables intelligent devices to enhance directional speech signals, thereby suppressing noise, obtaining clearer speech signals and providing better intelligent services.
At present, microphone arrays for high-end speakers have 6 to 8 microphones. The application of microphone arrays undoubtedly promotes the market demand for microphones. According to Lou's Electronics, the demand for microphones in China has more than doubled compared with last year. With the application of voice assistants in intelligent speakers and other fields, the microphone market is expected to grow further. Yole predicts that the shipment of microphones will reach 8 billion in 2022, with a composite growth rate of 11%, and the permeability of microphones will continue to increase.
Gore, Raytheon and Lou's are the world's leading microphones, positively laying out the technology of microphones. In October 2017, Geer invested in the establishment of Geer Microelectronics Co., Ltd. to further cultivate the field of micro-electronics. Through the combination of components, advanced packaging and software algorithms, integrated devices and intelligent sensor modules were developed. The products of micro-electronics microphones have the advantages of high performance, dust-proof, waterproof and intelligence. In June 2018, Raytheon announced that it would cooperate with Elliptic Lab to launch a reference design of the two-in-one technology of acoustic and ultrasonic devices, which could realize ultrasonic gesture recognition. Lou's Electronics launched SmartMic Intelligent Microphone Series, encapsulating DSP and MEMS microphone together, providing customers with ultra-low power intelligent microphone solutions and open DSP platform to develop customized functions. This scheme has been applied in OPPO Find X and other models.
With the rapid growth of microphones and the advanced technology reserve, the three companies have become the world's leading manufacturers of EMS, and Gore has become the only Chinese enterprise in the world's 20 largest micro-electronics companies. In the future, with the continuous upgrading of microphone technology and the growing market size, leading companies are expected to further consolidate their leading position in the world.