If Apple wants
to prove to doubters that there is life beyond the iPhone, then the wrists and
ears of millions of customers could provide the answer.
to prove to doubters that there is life beyond the iPhone, then the wrists and
ears of millions of customers could provide the answer.
Twelve years
from the launch of Steve Jobs’s signature product, Apple wearables – and the
services that tie in to them – have emerged as an important component of the
tech giant’s profile, accounting for more than a third of sales in the last
quarter.
from the launch of Steve Jobs’s signature product, Apple wearables – and the
services that tie in to them – have emerged as an important component of the
tech giant’s profile, accounting for more than a third of sales in the last
quarter.
Last week
Apple’s chief executive, Tim Cook, reported that sales in its wearables
division – which includes products from the Apple Watch to wireless headphones
– grew at a rate of 30% in the last quarter. If broken
out on its own the division would be in the top 200 of listed US companies,
Cook said.
Apple’s chief executive, Tim Cook, reported that sales in its wearables
division – which includes products from the Apple Watch to wireless headphones
– grew at a rate of 30% in the last quarter. If broken
out on its own the division would be in the top 200 of listed US companies,
Cook said.
The news is
especially surprising given the lukewarm initial reaction to many of the
products. When Apple’s design guru Sir Jonathan Ive first described his idea for the Apple Watch, back
in 2015, many looked on with scepticism or dismissed it as a fashion accessory.
According to analyst estimates, Apple sold
more than 20m watches last year alone.
especially surprising given the lukewarm initial reaction to many of the
products. When Apple’s design guru Sir Jonathan Ive first described his idea for the Apple Watch, back
in 2015, many looked on with scepticism or dismissed it as a fashion accessory.
According to analyst estimates, Apple sold
more than 20m watches last year alone.
The same was
true for the AirPod, Apple’s wireless headphone set, which was initially
dismissed as a gimmick that would provoke exasperation from consumers who
misplaced them. By some estimates sales this year will reach 60m pairs, rising
to 100m by 2021. According to analysis by the finance firm TF International
Securities, “there is a greater likelihood of legacy iPhone users buying
AirPods than upgrading to new iPhone models”.
true for the AirPod, Apple’s wireless headphone set, which was initially
dismissed as a gimmick that would provoke exasperation from consumers who
misplaced them. By some estimates sales this year will reach 60m pairs, rising
to 100m by 2021. According to analysis by the finance firm TF International
Securities, “there is a greater likelihood of legacy iPhone users buying
AirPods than upgrading to new iPhone models”.
But walk into
any Apple store, and the Apple Watch is prominently displayed at
the front. At the launch of the latest generation of phones, many customers
reported they were there for the watch, not the phone. AirPods, at £149 or $159
a pair, are shifting by the millions and have become a ubiquitous accessory of
the young male urban professional.
any Apple store, and the Apple Watch is prominently displayed at
the front. At the launch of the latest generation of phones, many customers
reported they were there for the watch, not the phone. AirPods, at £149 or $159
a pair, are shifting by the millions and have become a ubiquitous accessory of
the young male urban professional.
Apple does not break down sales
figures for the watch and AirPod, but its most recent sales report showed that
its wearables, home and accessories unit recorded a record quarter in March of
$5.1bn.
figures for the watch and AirPod, but its most recent sales report showed that
its wearables, home and accessories unit recorded a record quarter in March of
$5.1bn.
In total, the combination of wearables and services – such as
Apple Music subscriptions – accounted for 29% of total revenue, while the
iPhone fell to 54% of sales from its typical level of two-thirds.
Apple Music subscriptions – accounted for 29% of total revenue, while the
iPhone fell to 54% of sales from its typical level of two-thirds.
Apple may never hit the heights it achieved with the iPhone, but
analysts say the new figures underscore an important and long-term change in
strategy. “We’re seeing Apple put a stronger emphasis on the watch and AirPod,
as well as their new services like music and games, to start to fill in the
gaps where iPhone sales are slowing down because the demand for smartphones
worldwide has hit a peak,” says Tim Bajarin of Creative Strategies, a San
Francisco tech analysis company.
analysts say the new figures underscore an important and long-term change in
strategy. “We’re seeing Apple put a stronger emphasis on the watch and AirPod,
as well as their new services like music and games, to start to fill in the
gaps where iPhone sales are slowing down because the demand for smartphones
worldwide has hit a peak,” says Tim Bajarin of Creative Strategies, a San
Francisco tech analysis company.
While the global market of 2.5bn smartphones still has plenty of
room for sales from upgrades (as many as 350m iPhones this year and into next according to estimates), growth of Apple’s
wearables has caught many by surprise. “We know that once people get into the
Apple ecosystem they don’t leave,” says Bajarin, referring to the estimated 800
million to 1 billion people who already use Apple devices and are prime targets
for its wearable and services products.
room for sales from upgrades (as many as 350m iPhones this year and into next according to estimates), growth of Apple’s
wearables has caught many by surprise. “We know that once people get into the
Apple ecosystem they don’t leave,” says Bajarin, referring to the estimated 800
million to 1 billion people who already use Apple devices and are prime targets
for its wearable and services products.
“Apple’s concept, which seems to be paying off, was to add value
to their music service business with a hands-free Bluetooth headset,” he says.
It’s an age-old technique for Apple: introduce hardware that drives software or
information services. It worked with the iPod and the iPhone, and now for Apple
Watch and AirPod.
to their music service business with a hands-free Bluetooth headset,” he says.
It’s an age-old technique for Apple: introduce hardware that drives software or
information services. It worked with the iPod and the iPhone, and now for Apple
Watch and AirPod.
The HomePod has been one of the Tim Cook era’s
less successful launches. Photograph: Justin Sullivan/Getty Images
less successful launches. Photograph: Justin Sullivan/Getty Images
Both the AirPod and Apple Watch tap
into key markets. The watch targets millennials who want to monitor health and
exercise, while the AirPod supports Apple’s services business, particularly its
fast-growing Apple Music, which now reportedly has 28 million paid
subscribers in the US to Spotify’s 26 million. There is also the imminent Apple streaming service which
will compete with Netflix, Disney, and Amazon.
into key markets. The watch targets millennials who want to monitor health and
exercise, while the AirPod supports Apple’s services business, particularly its
fast-growing Apple Music, which now reportedly has 28 million paid
subscribers in the US to Spotify’s 26 million. There is also the imminent Apple streaming service which
will compete with Netflix, Disney, and Amazon.
Not all of the Cook-era products have struck gold. While the
watch got off to a slow start, some products have started slow and never picked
up – witness the HomePod, considered a pale imitator of Amazon’s Echo.
watch got off to a slow start, some products have started slow and never picked
up – witness the HomePod, considered a pale imitator of Amazon’s Echo.
For the watch, sales began to take off once Apple dropped the
idea of selling it as a luxury item, eliminating its $10,000 gold edition and
focusing on cheaper models.
idea of selling it as a luxury item, eliminating its $10,000 gold edition and
focusing on cheaper models.
“It was a mistake to make it a high-end fashion product,” says
Bajarin. “Once it became an extension of the iPhone and began delivering
accuracy around steps and heart rate, people began seeing it as a way to
augment their health, particularly among the millennial generation.”
Bajarin. “Once it became an extension of the iPhone and began delivering
accuracy around steps and heart rate, people began seeing it as a way to
augment their health, particularly among the millennial generation.”
Increasingly, it is Apple’s wearables business that is keeping
the company in touch with the tech-savvy global consumer.
the company in touch with the tech-savvy global consumer.
