Apple's portable product category, which includes devices such as Apple Watch and super-popular AirPods, has not received the credit it deserves for how important this collection of products has become to Apple's main line. According to a new analyst report, estimates from the iPhone manufacturer's wearables category will, believe it or not, eclipse content from iPad and Mac by the end of next year.
Analyst Neil Cybart's forecast is built around modeling that shows Apple's wearables category now with an annual revenue rate of $ 16 billion in revenue. To put the category's performance in a certain context, Netflix revenue fell just below that figure (just over $ 1
Even more impressive is this despite the importance Apple places on its growing category of "services" (did you catch the teaser trailer for the new Apple TV + series The Morning Show which dropped Monday?), with revenues from the wearables category almost eclipsed from services in the third quarter. "Consensus did not expect this to happen," Cybart notes, "when Services was positioned as Apple's growth engine. It is clear that consensus was spending too much time on the Services Highway and ended up missing out on wearables.
"When we look at wearables revenue growth, it becomes clear that Apple is benefiting from both higher ASP's for Apple Watch and AirPods as well as continued strong unit revenue growth. For AirPods, unit revenue growth is nothing short of spectacular at 80%. "
It's important to point out that Apple's apparel category, oddly enough, also wraps accessories like HomePod – though, the vast majority of sales can be attributed to Watch and AirPods. In addition, Cybart estimates that Apple is soon to enjoy an installed base of 100 million users for each of these two products. The company is already more than halfway there with Watch, he notes, and AirPods are getting there quickly despite only being on the market for a relatively shorter period.
Putting new portable devices that Apple adds to this category in the future, improvements to existing hits like Watch will undoubtedly only stiffen their heads here, reports like this show. For example, imagine what an Apple Watch that is completely free to need an iPhone, which will certainly do for the sale of Watch in the future.