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Home / Business / Apple Wearables becomes the growth engine for the company

Apple Wearables becomes the growth engine for the company



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

Melody Jeng | Getty Images

Apple is often referred to as the "iPhone company" because it is the product that has driven most of Apple's sales for years.

Since 2012, iPhone has accounted for over half of Apple's revenue for every quarter. But that line broke when Apple reported earnings on Tuesday – instead, Apple's largest product accounted for just 48% of total sales, and iPhone sales were actually 1

2% lower than last year.

Still, Apple beat expectations and overall revenue was up from a year ago.

The main product category that picks up the slack? What Apple calls the "wearables" category including the Apple Watch, AirPod's wireless earbuds and Beats headphones.

Apple CEO Tim Cook called it a "blowout quarter" for its wearables product category, saying it was "phenomenal in demand" for $ 159 AirPods.

Apple said sales of Wearables, Home and Accessories totaled $ 5.53 billion in the last quarter, which was a massive move – analysts surveyed by FactSet were expecting only $ 4.59 billion in sales, almost a billion less than the actual number.

It's hard to make a year-to-year comparison because Apple reorganized the product categories late last year, but Apple Watch and headphones used to be in a category called "Other Products," which totaled $ 3.7 billion in the same period last year.

"As I mentioned initially, it was a new startling quarter for Wearables, with growth accelerating to well over 50 percent," Cook said in a conversation with analysts to discuss the company's performance.

Apple no longer breaks down device sales, and never did for products like Apple Watch, so it's unclear which products are driving growth, but Cook said the laptop by itself – not accessories – was "well above" 50% and was the size of a Fortune 200 company over the past 12 months. (The 200th company on the Fortune 500 is General Mills, with $ 15.74 billion in revenue last year.)

Perhaps the biggest positive for Apple's future growth is that competition is less fierce in the smartwatch and wireless earbuds categories than in smartphones .

In the fourth quarter of 2018, the last quarter for which estimates are available, Apple was by far the largest company to be carried on device shipments, according to IDC data, with 16.2 million units shipped.

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

"We have the portable area that does very well," Cook said in response to a question about Apple's future apart from the iPhone. "We stuck with it when others might not, and really put a lot of energy into this and a lot of R&D, and are in a very good position today to continue to play what's next."


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