Apple is a world acknowledged tech titan. It is a widely known fact that Apple acquire most of its revenue from iPhones, which is a legendary product on its own. Despite of this, the company continues to diversify its revenue streams via exploring different product categories.
In today’s world, Apple has become a tech giant in the wearable industry. In 2015, Apple launched its first take on smart watch, famously known as Apple Watch. According to Luca Maestri, the company’s CFO this products, “continues to be the best selling smartwatch by a wide margin.”The success isn’t limited to smartwatches only.
In 2014, Apple acquired the iconic headphone maker, Beats Electronics. This collaboration resulted in Airpods wireless earbuds which the Apple CEO, Tim Cook, also includes in the wearables revenue.Mr. Cook told investors that, “our wearables revenue exceeded $10 billion over the last four quarters.” The executive acknowledges it as “truly remarkable accomplishment for a set of products that has only been in the market for a few years.”
Enormous Revenue Growth
According to Cook, Apple’s wearables revenue for the month of June, rose “over 60% year over year with growth accelerating from the March quarter.” In April, he claimed the revenues rose almost 50% year over year. Given that Apple’s wearables revenue grew by “over 60%”, and Apple Watch revenue was up in the “mid-40% range,”. We can evaluate by that, that Aipods and Beats sales went up more than 60%, which is a dynamic growth for any product.
Maestri added that AirPods “continue to be a runaway success and we’ve been selling them as fast as we can make them since their launch a year-and-a-half ago.”
The Fiscal Point of View
From the fourth quarter of Apple’s fiscal year of 2017 to the third quarter of fiscal year 2018, the company generated nearly $255.3 billion in revenue. Wearables are just developing in significance to the overall business performance, they make it possible for Apple to advance in direction of diversifying its revenue sources away from iPhones.
Moreover, Apple’s wearables products help fortify the organization’s ecosystem, making it hard for customers to breakaway their relationship with Apple. For example, the Apple Watch requires an iPhone to function, so iPhone users will be reluctant to switchover to other competitiors if they want to keep using their Apple Watch. It is a genius move, if you think about it.
In the end, the Apple Wearables industry is a force to be reckoned with and financial analysts should keep an eye out on their business over the next few quarters.