Dramatic growth in Apple's wearable clothing means that the product category – mostly comprised of Apple Watch and AirPods – will overtake both the iPad and Mac by the end of next year, says a new analysis.
While the market is focused on growth in the Cupertino company's services, it has largely missed its history in terms of portability, an analyst claims …
Neil Cybart says part of the reason it could be that the analysis is difficult given that Apple does not show unit sales for both products. But "an accurate financial model and closely followed by Apple clues" tells the story, he suggests.
On a revenue basis, Apple's wearables business is now at an annual interest rate of $ 16 billion, increasing by 55% to 60%. At the current pace, wearables will surpass both iPad and Mac by the end of 2020 to become the third largest product category behind iPhone and services when looking at revenue […]
Wearables almost exceeded services in 3Q19 as Apple's largest revenue generator when looking at revenue to absolute dollars. Consensus did not expect this to happen as Services was positioned as Apple's growth engine. It is clear that the consensus spent too much time on the Services freeway and ended up missing the wearables exit.
When we take a closer 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 growth in device revenue. For AirPods, unit revenue growth is nothing short of spectacular at 80%.
Apple's portable category is a little weird at the moment, as it also includes HomePod and Apple accessories, but most of the sales are believed to be from AirPods and Clock. Cybart estimates that these two products account for $ 60 million of portable sales of $ 70 million.
The analyst says Apple is going to be unstoppable in this category because of its huge base of installed devices.
Apple leverages its ecosystem of users and devices to provide the notebook with an ideal launch pad for success. While there are a handful of companies with more than one billion users, no other company has a billion-user ecosystem and nearly 1.5 billion units […]
Apple is well on its way to installing Apple Watch and AirPods on 100M people each. The company is more than halfway there with Apple Watch and is fast approaching the same level with AirPods despite the product being sold for half the time.
That, he says, makes it difficult for competitors to make a dent in Apple's portable sales.
Future growth in Apple's portable clothing can be even more dramatic. A future Apple Watch that no longer requires an iPhone is clearly part of Apple's roadmap and will increase sales further. The company is also working on a new portable form in the form of Apple Glasses – although it may still be several years away.
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