The AirPods Max are Apple’s next big bet on luxury audio, coming years after its HomePod speaker flopped. Here’s why things could be different this time.

• Apple's AirPods Max headphones are the company's next big bet on luxury audio, coming after the HomePod failed to gain traction.
• But the AirPods Max have a big advantage: People already love AirPods.
• There's also a market for high-end headphones targeted at audiophiles, whereas the HomePod seemed overpriced because many compared it to the $100 Echo.
• Regardless, the AirPods Max are crucial for Apple because they tell us about the company's long-term plan for what has become one of its most popular products.

The iPhone is undoubtedly Apple's most pervasive product. But it's undeniable that AirPods have become a blockbuster hit for the company, pushing Apple to the top of the headphone market in a matter of four years.

On December 8, Apple took its next major step in that direction with the introduction of AirPods Max, a pair of wireless over-ear headphones priced at $550 that inherit the same features that made AirPods so popular.

The AirPods Max's high price, which is more expensive than an iPhone and a pair of AirPods combined, immediately raised eyebrows for a few reasons. Not only are there plenty of less expensive noise-cancelling wireless headphones available from rivals like Sony, Bose, and Apple's own Beats brand, but Apple's last attempt at a high-end audio product - the original HomePod - never really caught on.

Still, the AirPods Max do have a few advantages that could make them more appealing than the HomePod. Their biggest asset is also the simplest: They're AirPods, and people can't seem to get enough of AirPods.

All told, whether people embrace the AirPods Max is crucial for the company, and not just because they present another opportunity to boost product sales heading into 2021. Rather, it's because the AirPods Max provide a clue about the future of what has quickly become one of Apple's most popular products.

Apple's second step into premium audio

Although they're separate products designed for different use cases, the HomePod and AirPods Max do share something in common. They're both intended to offer superior audio quality that surpasses the demands of most casual listeners.

Apple put its audio technology at the forefront of its AirPods Max announcement, highlighting components like the ring magnet motor for eliminating distortion even at high volumes, the Apple-designed driver, the headset's computational audio capabilities, and its acoustic-friendly design.

They're headphones, so it's only natural that Apple would shine a spotlight on their audio capabilities. But if you need more assurance that Apple is targeting the audiophile crowd, consider that the AirPods Max aren't rated for sweat and water resistance, suggesting they're not really meant for wearing to the gym.

When Apple unveiled the original Siri-powered HomePod in 2017, audio quality was the cornerstone of its appeal as well. Back then, smart speakers with Amazon Alexa and the Google Assistant built-in weren't tailored for a high-end listening experience.

Early smart speakers were fine enough for those who just wanted to put on some background music while cooking, cleaning, or hosting a few friends. But the audio quality couldn't come close to what you'd expect from a dedicated and often more pricey speaker from Sonos or Bose.

Apple sought to change that with the HomePod, which cost $350 at launch, much more than the standard Amazon Echo or Google Home. Its headlining feature, in addition to hands-free Siri access, was its ability to understand its position in a room and optimize the audio accordingly. It also comes packed with technologies like an Apple-designed woofer for delivering deep bass and seven beamforming tweeters to provide balanced sound.

But high audio quality wasn't enough to encourage customers to pay more for a speaker that ultimately did less. Amazon still leads the smart home speaker space and Google isn't far behind, while Apple is barely present. A survey conducted by Voicebot.ai of more than 1,000 US adults published in April suggested that Amazon's Echo held 53% of the market while Google held 31%.

It's not just the HomePod's high price that held it back from becoming a viable threat to Google and Amazon. Many reviewers criticized the HomePod at launch for its limited compatibility with non-Apple services and Siri's narrow functionality compared to Amazon Alexa and the Google Assistant.

To be sure, Apple is well aware of these shortcomings. It recently began allowing third-party music services to plug into the HomePod, although Spotify has notably opted not to do so, and launched the smaller and much more affordable $99 HomePod Mini.

Why the AirPods Max could be different

It's too soon to know whether Apple's new wireless headphones will be a success. But the AirPods Max do have a couple of assets working in their favor compared to the HomePod. For one, Apple's cheaper earbud-style AirPods are already widely popular, creating a strong foundation for the luxury AirPods Max.

And second, there's already a precedent for high-end headphones made with audiophiles in mind. The $500 Sennheiser HD 660S or $600 Beyerdynamic DT 1770 Pro serve as evidence of that. Those headphones, however, aren't wireless and are likely more geared toward professional studio use. It's possible that Apple hopes to achieve a balance with the AirPods Max by combining audiophile-worthy sound with modern features like a wireless design, noise cancellation, and auto-pairing.

The HomePod didn't have that benefit. It's true that there are plenty of high-end speakers that cost significantly more than the HomePod. But Apple's smart speaker was largely perceived as being an answer to Amazon's $100 Echo, making the HomePod seem overpriced.

There's no question that Apple has already captured the broad market for wireless headphones. Now, with the AirPods Max, it must prove it can win over audiophiles, too.

That's critical for the long-term success of AirPods. If the new over-ear headphones are a hit, it'll show Wall Street that AirPods still have a lot of potential to grow. It'll prove that AirPods have a long runway of possible new customers that extends beyond casual listeners, new iPhone owners, and existing AirPods users looking to replace or upgrade their current model.

And for a company like Apple that's so dependent on its ecosystem of products and how they work together, proving that AirPods aren't even close to hitting their peak is essential.