We independently review all our recommendations. Purchases made via our links may earn us a commission. Learn more ❯
Jabra raises the white flag in the fierce consumer audio market competition.
Last June 11, GN Group, the owner of Jabra brand, announced that it will wind down its Elite and Talk product lines as it officially exits the consumer audio market. This was done on the same day it announced its newest Elite earbuds.
This comes as GN aims to move its resources to more promising segments, such as hearing aids, enterprise solutions, and gaming to gain more profit.
In This Article
- Details and Reasons Behind Jabra's Decision
- What will happen to the new Elite earbuds?
- Industry and Financial Impact
In This Article
- Details and Reasons Behind Jabra's Decision
- What will happen to the new Elite earbuds?
- Industry and Financial Impact
Details and Reasons Behind Jabra’s Decision
After a thorough business analysis, GN determined that investing in the highly competitive consumer audio market is no longer worth it. This is all due to the risks and changing market conditions.
While this may come as a surprise for some, the announcement could have been building up since last year.
In 2023, Jabra repositioned the Elite line to compete head-on with industry giants like Apple, Sony, and Bose in the premium segment.
As a result, the Elite line brought in around 70% to GN’s consumer business revenue, while the Talk line accounted for about 10%.
Despite this, the company concluded that the money needed for continued innovation in the competitive consumer audio market has become unsustainable.
“The markets, though, have changed over time, and it is today our assessment that we cannot generate a fair return on investment compared to the many other opportunities we have within our Hearing, Enterprise, and Gaming businesses.” says GN Audio’s CEO, Peter Karlstromer.
“I am very grateful to our retail partners, who have supported us on the Elite and Talk product lines, as well as to the consumers who made us a part of their lives. We remain committed to working closely together to make this a successful wind down.”
The decision to discontinue the Talk line was further supported by the declining mono Bluetooth market.
They saw that consumer preferences have shifted towards more advanced and feature-rich wireless earbuds. So, the demand for basic mono Bluetooth devices has gone down a lot.
This market trend, combined with the fierce competition, made it impractical to keep investing in the Talk line.
What will happen to the new Elite earbuds?
In a bittersweet twist, the announcement was given just hours after GN announced the release of its final Elite products, the second generation of the Elite 8 Active and Elite 10 earbuds.
But, that doesn’t mean the release will not continue as planned.
“We remain committed to working closely together to make this a successful wind down. This includes continuing with the launch of our final Elite products, which are the best earbuds we ever made.” says Karlstromer.
As part of this process, GN plans to reduce the inventory of affected products, aiming to complete most of the process by the end of 2024.
Yet, loyal customers are guaranteed to not be left in the lurch. The company pledged to provide support and service for existing Jabra hardware for several years.
The BlueParrott product line, which represented about 20% of Jabra’s consumer business revenue in 2023, will also be moved into the Enterprise division starting in 2025. This aligns with GN’s strategy to capitalize on growth opportunities in the front-line worker market.
Industry and Financial Impact
Jabra’s exit from the consumer audio market is a big blow to those who sought alternatives to major players like Apple, Samsung, and Sony.
We can’t deny the important role Jabra played in making features like multipoint Bluetooth connectivity popular.
Jabra has once been the go-to alternative to Apple’s AirPods.
For example, Jabra’s golden era in the consumer market was arguably during the Elite 65t and 75t era between 2018 and 2020. This was before the increased competition from major players like Sony and Samsung began to take its toll.
Aside from that, this decision is expected to negatively impact the revenue in GN’s Gaming & Consumer division by approximately DKK -450 million in 2024.
The company will also likely incur extra costs of around DKK -200 million related to the wind-down. This includes severance payments and the write-down of prior development projects and inventories.
But, the Hearing division’s strong performance is expected to partially offset the negative impact.
GN now anticipates a free cash flow excl. M&A of “more than DKK 900 million” for 2024, up from the earlier expectation of “more than DKK 700 million”.
In the long term, GN aims to drive a CAGR organic revenue growth of 5-8%, with the wind-down supporting targeted margin expansion towards the 2028 goal of 16-17%.
GN has assured customers that it will continue to service and support existing Jabra devices for several years.
