Apple Maintains Supremacy in Wearables Market With 21.2 Million Units Shipped in Q1 2020

Remember when buying Beats and releasing the Apple Watch were huge mistakes according to armchair CEOs?

And when AirPods were an embarrassing flop according to The Verge’s Nilay Patel?

It all began back in 2001 when Apple should have released a new server, not an overpriced music toy.

Not surprised either. The Watch is in a league of its own, and the AirPods Pro struck gold as the best all-rounded pair available at the moment.

I 100% agree with your sentiment that they are completely different product types, but although I can’t point to anything specific I feel like the “wearables” category label was created by Wall Street “analysts” and Apple is now following a standard categorization (albeit a silly one).

Would be interested to know if other forum members can shed some light on the question.

If they wanted to hide sales numbers, then why report anything? They could just do what they do with iPhone and report profits only.

When deciding whether or not to believe something, always test the converse question for plausibility. Why wouldn’t they disclose separate revenue numbers for every individual product? Do they not know them? Don’t bother to track them? Don’t think they’re internally important? None of these ideas comes close to passing the sniff test. Naturally they know them, and much more. They know how many of each model, size, color, and capacity of every iPhone they’ve ever sold. They don’t include those numbers in stockholder calls either. I think they’re trying to strike a balance between revenue guidance and hiding individual product data.

Apple became quite tired of Wall Street analysts falling all over themselves counting iPhone unit sales and average sale prices when the Apple Watch and services began ramping up in unit sales, revenue growth, and increased percentages of overall revenue. The narrative Wall Street kept repeating ad nauseum was “Apple will hit the wall with iPhone sales, they are a one-trick pony, Apple is doomed.” When Apple stopped reporting unit sales data and concentrated on overall sales group revenue and profits, Wall Street cried foul, became angry, and the stock dropped for about 2 months. Meanwhile, Apple reported separate groupings for iPhone, Mac, iPad, “Wearables, Home, and Accessories”, and Services. Savvy investors understood this but many analysts still stuck to their old iPhone or nothing narratives, keeping the stock and PE multiple depressed in the mid teens.

Cook kept telling everyone who would listen in early 2017 that Services would double from $24.3B in 2016 to $50B annually by 2020. In 2019, Apple Services were $46.9B, a 16% change from 2018. Apple will be on its way towards beating that goal in FY 2020, as Cook said they would.

Wearables were $12.8B in 2017, $17.38B in 2018 (36% rise), and $24.48B in 2019 (41%) rise, and itself almost doubling like Services did, no doubt fueled by Watch, AirPods/AirPods Pro, and others. iPhones had dropped 14% in 2019 but it was easy to see, if you were looking, that Apple had successfully began and accelerated their revenue diversification. Apple’s blowout 1Q 2020 and better than expected 2Q 2020 Covid affected report still suggest that change is continuing and the iPhone had been doing better than expected. Over the past 3 quarters, analysts were finally waking up and revising their expectations upward, in concert with recognition that Watch, AirPods and now services was leading growth for Apple.

As for “hiding” product data, most all smartphone makers now “hide” individual model data (Samsung included) and only trumpet sales when it suits them (remember Samsung reporting huge first week or month sales, only to later report quarterly or annually sales of mobile devices, especially flagships, would be lacking in revenue and profits?). It’s the quarterly sales, revenue, profits and gross margin which are most important to show a strong business model, and of course, Apple has been much better and stronger at doing that than any other tech company.

I agree they are trying to balance the narrative for investors and analysts alike without revealing too much to competitors who would love to have even a small slice of Apple’s revenue, profits and success. Why else would they copy so much of Apple’s look, design, and experience if not to coattail somehow on Apple.

The first generation of Watch was a puzzling mess, and the first AirPods had people torn whether they're brilliant and svelte or gimmicky, perishable and unsightly.

As for Beats.. it's still a wonky teenage overpriced brand and a brand like Bowers & Wilkins may have made more sense for Apple.

when I saw the Apple Watch S0-1 personally I thought it was a GREAT market segment to get into yet I didn’t feel it was too compelling for the average Apple consumer.

that’s why Apple created the Gold Watch S0, along with Ive’s sooth saying introduction video along with getting major celebrities in on the game. I recall Toronto’s Hip-Hop top dog Drake was still a BlackBerry good-our and then just prior to launch by 30 days he leaked the Gold Watch on his IG account and things got nuts. You’ll recall he was featured after the launch on Apple’s initial Apple Music push wearing the Watch in stage, being honoured at that time as the artist with THE most album sales/streams (cannot recall yet likely the latter) globally in a day.

Sony has over 5yrs experienceprior to Apple with digital watch yet they somehow just lost their way changing 2 iterations just prior to compete with blogging (a complete joke) then heart rate.

when Apple saw huge uptick in FitBits sales they looked at their ecosystem, apps and adjusted their focus for the better. I came on board with Nike+ partnership in S3 and very happy.

Apple had the opportunity to purchase Bowers & Wilkins when Jobs was around. They already were partners since the last few iPod stereo decks. With their other products the lineup was too narrow for a range and over priced for the market Apple was seeking. And other than speakers, docks and headphones didn’t offer much, not to mention not much of a well known brand in the USA, Apples home market.

Beats was THE smarter move. Not only for headphones or streaming music yet also a VERY well known brand that did NOT need much marketing, along with healthy target market not just with teens yet with adults heavily into sports - NBA, NFL, and gyms for fitness/bodybuilders. This was NOT just in the USA either. Apple’s purchase generated huge and free advertisement as well. Apple also could bundle the low end with laptop sales for back to school.

adults with students with younger siblings got into stores, the adolescents got the laptop and Beats Solo’ for free (upgrade to Studios for a few), while younger siblings most like had their parents purchasing a lower end headphones as well.

the bonus was apples audio engineering team got to learn more with range of frequency profiles. Don’t kid yourselves to thinking this didn’t help with AirPods getting to the market. ANC got on 2 Beats headphones 1.5yrs before the AirPods Pro’s. While sound quality improved on Beats after the AirPods (v1) launched.

All in all a MUCH better deal than Bowers Wilkins.

I 100% agree with your sentiment that they are completely different product types, but although I can’t point to anything specific I feel like the “wearables” category label was created by Wall Street “analysts” and Apple is now following a standard categorization (albeit a silly one).

Would be interested to know if other forum members can shed some light on the question.

I do not believe this was created by Wall Street. It was created by Apple to, in my opinion, limit the detail of their specific product revenue reporting. The category is actually “wearables, home, and accessories” and its revenue is reported as a single number. The more products they can plausibly bundle into one category, the more individual product sales variances are buffered against one another.

Taking criticism out of context is an armchair CEO comment too.

The first generation of Watch was a puzzling mess, and the first AirPods had people torn whether they're brilliant and svelte or gimmicky, perishable and unsightly.

As for Beats.. it's still a wonky teenage overpriced brand and a brand like Bowers & Wilkins may have made more sense for Apple. At least Steve's Apple, that is.



They had to persist. It's the only new product category they've ever introduced since Steve's passing.

Exactly, Tim needed to hit a home run. He has, but it took him a good number of years to do so.
That $10K gold edition was just nuts. While it could still be fashionable, that wasn't enough and health and fitness is when it finally kicked into high gear.