Microsoft's latest technology giant to build AirPods Rival – The Motley Fool

Since Apple (NASDAQ: AAPL) In 2016, the wireless headset market has taken the AirPods by storm. The giants of the competition have chased the Mac manufacturer with products that look like them and hope to replicate the popularity of AirPod. Last month, Apple released second-generation models with additional enhancements that will help it defend itself a little longer from its competitors. Alphabet subsidiary Google released Pixel Buds in 2017, Samsung Galaxy Buds was launched last month and Amazon.com would have Alexa-compatible headsets expected to debut later this year.

Microsoft (NASDAQ: MSFT) do not sit idly by.

"Surface Buds" coming in?

Thurrott reports that the software giant is developing wireless earpieces in the same way, whose internal code name is "Morrison". The product will probably be nicknamed Surface Buds, although it may change the output here. Most companies integrate their respective virtual assistants into their wireless headsets, which are now an essential criteria for being labeled portable devices, as far as IDC is concerned, and Microsoft's Cortana is set to emerge.

Last year, Microsoft unveiled its Surface Headsets, an unexpected foray into the space of wireless headsets featuring active noise cancellation and Cortana adjustable integration. At $ 350, Surface headsets are in direct competition with popular headphones such as the Bose Quiet Comfort 35. The development of the in-ear headphones would be a natural complement to Microsoft's audio accessories portfolio, and it is interesting to note that Apple apparently works on top quality headphones as well.

Trying to bite into Apple

Apple has never disclosed volumes of AirPods units, but according to IDC, the Mac manufacturer has delivered 5.8 million devices worn to the ears (also called "decapable devices") in the fourth quarter, which would include AirPods as well as some Beats models.

More recently, Counterpoint Research had estimated that Apple had captured 60% of the consumer audio device market in the fourth quarter, but that sales had slowed in the first quarter as consumers wait for the second-generation AirPods. According to Counterpoint's estimates, the rest of the market is relatively fragmented, with most players taking up relatively small tranches.

At the same time, Microsoft's leading hardware ambitions have only grown over time, with its Surface product line resonating with consumers and enterprise users alike. Surface sales reached a new quarterly record of $ 1.9 billion in the fourth quarter, following a large number of product launches in October, including the aforementioned Surface earphones.

The good performance of the Surface portfolio helped Microsoft mitigate the weakness of its Windows OEM business, where it licensed its flagship operating system to third-party manufacturers. "The results of our Windows OEM business were below expectations, partially offset by strong bottom-line results," Chief Financial Officer Amy Hood said in January. Surface is selling well and additional complementary accessories should help Microsoft continue this momentum.