Apple turning AirPods into hearing aids underscores effort to crack massive health market
Apple AirPods Pro
Apple
Soon, people with AirPods in their ears might not be drowning you out — they might be wearing them to hear you better.
Apple announced on Monday that its AirPods Pro 2 headphones will become an FDA-cleared hearing aid in the coming weeks through a software update. That means that adults with mild or moderate hearing loss — about 30 million Americans, according to the Food and Drug Administration — will be able to use Apple earphones to amplify specific sounds they want to hear better.
“After you take a hearing test, your AirPods Pro are transformed into a personalized hearing aid, boosting the specific sounds you need in real time, like parts of speech, or elements within your environment,” Apple’s vice president of health, Sumbul Desai, said in the feature’s launch video.
The announcement is the latest example of Apple’s strategy to break into the health industry, a potential $15 trillion market by the year 2030, according to RBC Capital Markets. Apple CEO Tim Cook has highlighted health features as the company’s “most important contribution to mankind.”
That strategy includes developing FDA-cleared features for its wearable products and replacing what are often more expensive purpose-built medical devices. Since 2020, Apple has added a notification service for irregular heartbeats, an atrial fibrillation reader and an electrocardiogram reader to its Apple Watch, according to FDA filings.
The new feature is a free software update for some AirPods models and will be included with Apple’s $249 AirPods Pro 2.
Many over-the-counter hearing aids are much more expensive, according to buyers guides cited by the Hearing Loss Association of America, an advocacy group. While some OTC hearing aids cost as little as $99, most range from $799 into the thousands of dollars.
“What is really cool about Apple now saying their AirPods can be over-the-counter hearing aids, is we’re seeing that technology innovation at a price point and in a product that’s very mainstream,” said Barbara Kelley, executive director of the Hearing Loss Association of America.
Apple is trying to jump-start AirPods sales after a few soft years.
The company doesn’t break out AirPods stats individually, but its Wearables category declined 2% annually for the most recent quarter that sales are available. Analysts say that adding health features like a hearing aid expands the market for the device, which could help sales.
“The hearing aid piece is a very specific use case,” said Deepwater Asset Management founder Gene Munster, who estimates that AirPods account for about 5% of Apple’s total revenue. “It does open it up to a different market.”
How it works
Apple’s hearing health experience requires a pair of Apple’s AirPods Pro headphones and an iPhone.
The company has built a hearing test into its devices inside the Settings app. After the program checks to make sure the headphones fit the user’s ears correctly, it plays a series of tones over about five minutes. The user has to tap the screen when or if they hear a tone.
This creates a profile of various frequencies and volume settings that the user may have trouble hearing, which are stored in the Health app. That profile can be applied to turn the AirPods Pro into personalized hearing aids.
Apple said that the test was scientifically valid and based on data it collected from its noise detection apps and a study with 160,000 participants that started in 2019.
In a promotional video, Apple showed a mom putting in AirPods to better hear her son on her birthday.
Over the counter
Apple’s launch has been boosted by a recent regulatory change.
Previously, all hearing aids required a prescription after testing from a licensed audiologist. In 2022, the FDA opened up the market to over-the-counter hearing aids that were significantly cheaper due to the use of audio testing software or at-home fittings.
However, Apple’s AirPods won’t immediately make other hearing aids obsolete.
Among its limitations are the battery, which lasts six hours. That’s not enough for the kind of all-day wear that some OTC hearing aids can manage.
Also, the AirPods Pro are only for those with mild or moderate hearing loss, meaning people who have trouble making out speech in noisy settings. Anyone with “severe” or “profound” hearing loss still needs to see a licensed audiologist, experts said.
Additionally, Apple’s hearing aids still need FDA clearance.
Devices that use technology or software to customize hearing aid fit or settings require premarket clearance from the agency, an FDA press officer told CNBC. Apple is awaiting FDA clearance as well as clearance from regulators around the world, the company said Monday.
Bridget Dobyan, executive director of the Hearing Industries Association, said that she welcomed Apple’s entrance into the market to increase awareness of hearing health, but there are still many hearing loss situations that require a doctor-based approach.
“OTC hearing aids may be suitable for adults with mild to moderate hearing loss, but seeing a licensed hearing care professional can also help determine unique hearing health needs,” Dobyan said.
It’s not uncommon for Apple’s foray into health to draw criticism from incumbents who say the tech company’s features aren’t a replacement for actual medical devices.
For example, Joe Kiani, CEO of Masimo, a medical device company that is currently in litigation with Apple over intellectual property and trade practices, said earlier this year that the Apple Watch’s pulse oximeter feature was “masquerading” as “a reliable, medical pulse oximeter.”
After a legal victory over patents, Masimo forced Apple in January to turn off the pulse oximeter on newly sold Apple Watch devices.
President of Microsoft North America Judson Althoff speaks on stage during We Day at KeyArena on April 23, 2015 in Seattle, Washington.
Mat Hayward | Getty Images
Microsoft‘s top-ranking sales leader, Judson Althoff, has been promoted to a bigger role as CEO of the company’s commercial business.
Satya Nadella, Microsoft’s CEO, wrote in a memo on Wednesday that marketing and operations will move under Althoff’s organization. Most of Microsoft’s revenue comes from commercial offerings such as productivity software subscriptions and cloud-based Nvidia chips for running artificial intelligence models.
“Our success depends on enabling commercial and public sector customers and partners to combine their human capital with new AI capabilities to change the frontier of how they operate,” Nadella wrote in the email. “To accelerate this, we will increasingly need to bring together sales, marketing, operations, and engineering to drive growth and strengthen our position as the partner of choice for AI transformation.”
Althoff, who joined from Oracle as president of Microsoft’s North America business in 2013, was already among Microsoft’s highest-paid executives, receiving over $23 million in total pay in the 2024 fiscal year. His most recent title was executive vice president and chief commercial officer.
Under Nadella, who replaced Steve Ballmer as CEO in 2014, Microsoft has more frequently used the CEO title for select executives.
LinkedIn has had a CEO since Microsoft acquired the company in 2016. Last year Microsoft hired Mustafa Suleyman, a co-founder of the DeepMind AI lab now owned by Google, and made him CEO of a group called Microsoft AI that includes Bing. And GitHub, which Microsoft bought in 2018, had a CEO until last month, when Thomas Dohmke left the company.
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Yusuf Mehdi, executive vice president and consumer chief marketing officer at Microsoft, speaks at a company briefing in Redmond, Wash., on May 20, 2024. Microsoft unveiled a new category of PC that features generative artificial intelligence tools built into Windows, the company’s world-leading operating system.
Jason Redmond | AFP | Getty Images
Microsoft said Wednesday that it will stop promoting a consumer subscription for artificial intelligence services and introduced a bundle blending AI features with traditional productivity apps.
The software company introduced Copilot Pro at $20 per month in early 2024. Microsoft 365 Family, which allows for up to six users and 6 terabytes of cloud storage, goes for $12.99 each month. The new Microsoft 365 Premium tier essentially combines both and will cost $19.99 a month.
“Other AI tools stop at chat — we deliver that plus so much more,” Yusuf Mehdi, Microsoft’s consumer marketing leader, wrote in a statement provided to CNBC.
Microsoft is not discontinuing Copilot Pro, a spokesperson said.
Technology companies have been trying to capitalize on the broad interest in tapping generative AI models to compose documents and create videos.
Microsoft offers a free version of its Copilot assistant, in line with Anthropic, Google and OpenAI, all of which sell paid subscriptions for consumers.
Microsoft 365 Premium comes with higher usage limits than the free Copilot and productivity software subscriptions targeting consumers.
As was the case with Copilot Pro and with consumer Microsoft 365 subscriptions, the new offering enables conversations with Copilot in Microsoft’s Office apps such as Word, Excel and PowerPoint.
Microsoft is sweetening the new offer with forthcoming access to two AI reasoning agents that so far have only been available to corporate workers with Microsoft 365 Copilot subscriptions.
OpenAI relies on Microsoft’s Azure cloud to run its ChatGPT assistant and its underlying models, and Microsoft incorporates the models into its Copilot. Microsoft has invested more than $13 billion in OpenAI. The companies are partners that also compete.
Microsoft reported 89 million consumer subscribers for Microsoft 365 services in the June quarter, up 8%. Revenue growth from those products has accelerated for three quarters in a row, reaching 20% in the June quarter.
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