Significant growth in Apple Watch and AirPods sales in recent years mean that Apple’s wearable technology market will overtake the iPad and Mac markets by the end of 2020, according to a new analysis.
Although analysts have been focused on Apple’s services division, with the company unveiling Apple TV+, Apple News+, Apple Card and Apple Arcade earlier this year, its wearables market has been widely overlooked.
Neil Cybart from Above Avalon has suggested that the reason for critics and investors overlooking the wearables market is because Apple no longer reveals unit sales for the range – and soon won’t release sales for its iPhone, Mac, or iPad ranges, either.
“On a revenue basis, Apple’s wearables business is now at a $16 billion annual run rate growing at 55% to 60%,” he said in his report.
“At the current pace, wearables will surpass both the iPad and Mac near the end of 2020 to become the third-largest product category behind iPhone and Services when looking at revenue.”
“Wearables nearly exceeded Services in 3Q19 as Apple’s top revenue growth generator when looking at absolute dollars. The consensus was not expecting this to occur as Services were positioned as Apple’s growth engine.
“It is clear that consensus spent too much time on the Services highway and ended up missing the exit for wearables.”
“In taking a closer look at wearables revenue growth, it becomes evident that Apple is benefiting from both higher ASPs for Apple Watch and Airpods as well as continued strong unit sales growth.
“For AirPods, unit sales growth is nothing short of spectacular at 80%.”
It’s interesting to note that Apple’s wearables category currently includes products such as HomePod and Apple accessories, but as we previously reported, HomePod has struggled to make an impact and so the vast majority of revenue in the wearables category will come from AirPods and Apple Watch.
Cybart has suggested that the two products combined account for around 60 million of the overall 70 million wearable sales, a significant percentage.
He went on to say that “Apple is leveraging its ecosystem of users and devices to give its wearables business an ideal launching pad for success. While there are a handful of companies with more than a billion users, no other company has an ecosystem of a billion users and nearly 1.5 billion devices.
“Apple is well on its way to having Apple Watch and AirPods installed bases of 100M people each.
“The company is more than halfway there with Apple Watch and is quickly approaching the same level with AirPods despite the product being sold for half the time.
Apple Watch is still in its infancy, with many requested features – such as the ability to use an Apple Watch without an iPhone – now in development, which will have a significant impact on sales and encourage non-iPhone users to make the switch to Apple Watch, too, widely considered the best smartwatch on the market.
Apple is also reportedly working on new wearable technology such as Apple Glasses, AR glasses for consumers, and a new Tile-inspired tool for tracking possessions that will integrate within the new Find My app, released with iOS 13.
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