Apple’s wearable products have proven to be market leaders. As the Apple Watch and AirPods gain market share, they will soon outpace Mac and iPad sales.
Growth in wearable technology, such as smartwatches and compact, smart earbuds, is increasing dramatically. Wearable products mature and decrease in price, as consumers warm up to the technology.
Apple has yet to disclose sales numbers for wearables. Technology analyst Neil Cybart estimates Apple’s wearables to account for $16 billion in revenues with an annual growth rate of over 55%. With this growth rate, Apple’s wearables business will surpass the iPad and Mac by 2020.
AirPods have turned out to be a blockbuster product for Apple. The popular wireless earbuds account for an 80% growth rate, according to Cybart. AirPods were notoriously difficult to purchase for several months after launching, due to extremely high demand.
The competitive landscape seems to favor Apple. Their closest competitor, Fitbit, shipped 5.5 million smartwatches in 2018 compared to Apple’s 22.5 million. Samsung shipped only 5.2 million devices in 2018. While Fitbit saw astronomical growth, Samsung experienced a modest increase in shipments. Analysts expect Apple to dominate the wearables market, through aggressive growth.
Improvements in Apple’s wearable technology may help attract consumers. Both the Apple Watch and AirPods have evolved through multiple generations. The Apple Watch is now a mature product with four generations of improvements. Newer Apple Watches can work independently of the iPhone with built-in cellular data connectivity, making them more appealing to consumers. The newest AirPods offer voice enabled Siri using a new H1 processor, in addition to other appealing advancements.
Macroeconomic forces and trade politics could possibly put a damper on Apple’s wearable product revenues. Wearables may prove to have greater demand elasticity, as consumers cut back on superfluous expenses during recessions. A continuing trade war with China could also affect Apple’s wearables revenues, as tariffs increase the cost of devices, resulting in slow sales.