IPhone 7, New Apple Watch Unveiled

Seeking to bolster its wearable tech business, Apple is working on upgrades to its wireless AirPods headphones, according to people familiar with the matter.

Like with its mobile devices—the iPhone, iPad and Apple Watch—Apple intends to frequently update the AirPods with new hardware features. The Cupertino, California-based technology giant is working on a new version for release as soon as this year with an upgraded wireless chip, the people said. A subsequent model for as early as next year is planned to be water resistant, they added, asking not to be identified discussing private product plans.

The model coming as early as this year will let people summon Apple's Siri digital assistant without physically tapping the headphones by saying "Hey Siri." The function will work similarly to how a user activates Siri on an iPhone or a HomePod speaker hands-free. The headphones, internally known as B288, will include an upgraded Apple-designed wireless chip for managing Bluetooth connections. The first AirPods include a chip known as the W1, and Apple released the W2 with the Apple Watch last year.

The idea for the water-resistant model is for the headphones to survive splashes of water and rain, the people said. They likely won't be designed to be submerged in water. The latest iPhones can survive splashes, while the Apple Watch is considered "swim-proof." Apple's plans could change or be delayed, the people say. An Apple spokeswoman declined to comment.

The AirPods are designed by the same department that produced the HomePod speaker. Apple introduced the first AirPods in 2016 alongside the iPhone 7 as a way to replace the traditional wired headphone jack. Since launch, AirPods have been considered one of the top-performing Apple products and have resonated with both reviewers and consumers.

The product helped take wireless headphones mainstream. It was one of the first models to be fully wireless and come in a case that charges the headset. Similar products followed from Google, Sony, Samsung, Motorola and Bose. AirPods accounted for 85 percent of the money spent in the U.S. on wireless headphones since they debuted, research firm NPD Group estimated last year.

Apple's Other Products segment, which includes AirPods, Beats headphones, the Watch, Apple TV and accessories, generated more than $5 billion in revenue for the first time in the company's fiscal first quarter, representing 36 percent year-over-year growth.

"Wearables were the second-largest contributor to revenue growth after iPhone, which is impressive," Apple Chief Financial Officer Luca Maestri said during a conference call with analysts earlier this month, adding that sales jumped almost 70 percent last year.

The category may to continue to grow. Apple has said it is releasing an upgraded AirPods case this year that allows the headphones to be recharged wirelessly, like the iPhone X. The company is also working on an augmented-reality headset that would launch in 2020 at the earliest.

Bloomberg News

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