Apple Wearables becoming growth engine for company

Simone Marchetti wears Apple AirPods throughout Milan Fashion Week in Milan, Italy.

Melodie Jeng | Getty Images

Apple is sometimes called the “iPhone company,” as a result of that is the product that is pushed nearly all of Apple’s gross sales for years.

Since 2012, the iPhone has accounted for over half of Apple’s income for each single quarter. But that streak broke when Apple reported earnings on Tuesday — as an alternative, Apple’s greatest product solely accounted for 48% of whole gross sales, and iPhone gross sales had been really down 12% from final yr.

Yet Apple beat expectations and whole income was up from a yr in the past.

The major product class choosing up the slack? What Apple calls “wearables” — the class together with Apple Watch, AirPods wi-fi earbuds, and Beats headphones.

Apple CEO Tim Cook known as it a “blowout quarter” for its wearables product class and mentioned there was “phenomenal demand” for the $159 AirPods.

Apple mentioned that Wearables, Home and Accessories gross sales totaled $5.53 billion in the newest quarter, which was an enormous beat — analysts surveyed by FactSet had been solely anticipating gross sales of $4.59 billion, practically a billion lower than the precise quantity.

It’s laborious to do a year-over-year comparability, as a result of Apple rearranged its product classes late final yr, however Apple Watch and headphones was once in a class known as “Other Products,” which totaled $3.7 billion in the identical interval final yr.

“As I mentioned at the outset, it was another sensational quarter for Wearables, with growth accelerating to well over 50 percent,” Cook mentioned in a name with analysts to debate the company’s outcomes.

Apple does not escape unit gross sales anymore, and by no means did for merchandise like Apple Watch, so it is unclear eactly which merchandise are driving the growth, however Cook mentioned that wearables by itself — not equipment — was up “well over” 50% and was the dimensions of a Fortune 200 company during the last 12 months. (The 200th company on the Fortune 500 is General Mills, with $15.74 billion in income final yr.)

Perhaps the most important constructive for Apple’s growth going ahead is that competitors is much less fierce within the smartwatch and wi-fi earbud classes than in smartphones.

In the fourth quarter of 2018, the final quarter which estimates can be found, Apple was by far the primary wearables company by unit shipments, based on IDC information, with 16.2 million models shipped.

Next was Xiaomi, with 7.5 million models, primarily shipped to China.

“We’ve got the wearables area that is doing extremely well,” Cook mentioned in response to a query about the way forward for Apple apart from the iPhone. “We stuck with that when others perhaps didn’t, and really put a lot of energy into this and a lot of R&D, and are are in a very good position today to keep playing out what’s next there.”

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