Apple’s Wearables Are Now Making as Much Money as iPads and Macs

Apple Watch Airpods Credit: Daniel Korpai
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Apple made its usual quarterly earnings announcement yesterday, and as we already noted in the key takeaways, the company’s wearables and services businesses is booming, but when put in perspective with the rest of Apple’s numbers, it’s actually somewhat astonishing at how much those particular segments of the company’s products have grown, and what it’s revealing about the next coming metamorphosis of Apple.

In a series of charts on Six Colors, Jason Snell provides some very illustrative indications of exactly where Apple’s revenue is coming from, as John Gruber points out at Daring Fireball, Apple’s wearables category is now “a full peer, revenue-wise, to [both] Mac and iPad,” speculating (accurately we think) that the growth has been driven predominantly by AirPods.

To be fair, however, the category actually includes more than just wearables — it’s technically called Wearables, Home and Accessories, and includes things like Apple’s HomePod and iPod touch along with Apple-made cases, covers, cables, and power adapters. Still, while Apple doesn’t break things down any further, it’s a safe bet that the lion’s share of the revenue in that category is coming from the considerably more expensive Apple Watch, as well as Apple’s AirPods, of course, which have been consistently selling like hotcakes since they day they were first introduced, and have only been bolstered with Apple’s recent debut of the second-generation iteration. Although the higher-priced HomePod is in that category as well, it’s been meandering along in comparison.

So in other words, in the last quarter, Apple sold enough AirPods, Apple Watches, HomePods, and other miscellaneous accessories to make as much money as every iPad or every Mac that the company sold, and this comes in the same quarter as Apple debuted two new entry-level iPad models, and not long after Apple’s release of the higher-end iPad Pros. It’s no wonder that Apple isn’t sitting still with its AirPods, with the new sportier Beats-branded Powerbeats Pro variation arriving in stores next week, and rumours of not one, but two more new models of AirPods that could appear by the end of this year.

Meanwhile, Apple’s services revenue has gone through the roof, now accounting for 20 percent of Apple’s overall revenue last quarter — twice as much as wearables, and more than Apple’s Mac and iPad sales combined. Undoubtedly a big chunk of that still comes from Apple’s search deal with Google and the cut it takes from App Store developers — earlier this year analysts pegged those as making up about 50 percent of services revenue, however Apple’s foray into News+ certainly can’t be hurting things, and when Apple TV+ and Apple Arcade launch this fall, there’s a good chance that we’ll see Apple’s Services category become the second-largest piece of the Apple pie.

With the smartphone market flattening out — and the iPhone of course along for the ride — it’s been clear for a while that Apple is preparing for the post-iPhone era, making a much stronger push into a services business and the kind of recurring revenue that it provides, as well as a collection of high-profile “moonshot” projects like the Apple Car that will expand its reach into entirely new realms. Prior to 2007, few people expected that Apple would revolutionize the smartphone industry, and with that boom ending, we’re once again seeing Apple on the cusp of its next big transformation.

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