Strength of Apple's Wearables Category Makes Up for Waning iPhone Sales

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Apple's Wearables, Home, and Accessories category, which includes devices like the AirPods and Apple Watch, set a new June quarter revenue record of $5.5 billion, up from $3.7 billion in the year-ago quarter.

Sales from Apple's wearables category helped make up for weak iPhone sales this quarter. iPhone revenue came in at $26 billion, down from $29.5 billion in third quarter of 2018.


Apple CEO Tim Cook said that wearables had an "absolute "blowout" quarter with growth well over 50 percent. Apple Watch set a new June quarter revenue record and is reaching millions of new users. More than 75 percent of buyers in the June quarter were first time Apple Watch buyers.

Apple's services category, which hit a new all-time high revenue record of $11.46 billion, also helped Apple make up for the 12 percent decline in iPhone revenue.

Wearables and services combined are now the size of a Fortune 50 company according to Cook. Cook also said that Apple's wearables business is larger than 60 percent of companies in the Fortune 500.

Article Link: Strength of Apple's Wearables Category Makes Up for Waning iPhone Sales
 

ipedro

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Nov 30, 2004
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Just as expected. I’ve been saying in this forum since before the launch of the Apple Watch that wearables were the next growth market for Apple. So far, they’ve launched 2 of the 3 expected pieces: Apple Watch and AirPods. When Glasses are added, they’ll complete the trinity and the iPhone era will dawn.

Your Watch will be your primary device. AirPods and Glasses will complement it. A slab of glass in your pocket will be entirely optional.
 

apolloa

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Oct 21, 2008
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I’ve had some heart issues this year and my Apple Watch has proved invaluable. It’s heart rate monitor is damn accurate and comparable to those in hospital or that the paramedics use. And I only have a series 1. I see more and more people with them now, because they work with iPhones from is it the 6 and up? Then people are keeping their old phones and grabbing the watch.
 
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RodThePlod

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So far, they’ve launched 2 of the 3 expected pieces: Apple Watch and AirPods. When Glasses are added, they’ll complete the trinity and the iPhone era will dawn.
Love my Apple Watch, but I'm still struggling with the whole smart glasses thing! People wearing glasses with cameras in them seems a bit creepy to me, and I wonder how socially acceptable it would be? I could see the adoption rate being seriously hampered by that.

Having said that, if any company can find a way to implement this correctly, it'll be Apple. So very interested to see what happens in this space over the next few years!
 
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ipedro

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Love my Apple Watch, but I'm still struggling with the whole smart glasses thing! People wearing glasses with cameras in them seems a bit creepy to me, and I wonder how socially acceptable it would be? I could see the adoption rate being seriously hampered by that.

Having said that, if any company can find a way to implement this correctly, it'll be Apple. So very interested to see what happens in this space over the next few years!
If you had told people in 1990 that it would be acceptable for everyone to bring a camera into gym change rooms and for people to have cameras in their homes, they would have said it’s creepy. Our generation might still find it a bit unsettling but young people will completely adapt to the concept of having everything you see a potential shareable clip. We’ll just adjust to the idea that if you’re in public, you might be recorded. Privacy is behind closed doors.
 
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Bawstun

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Just as expected. I’ve been saying in this forum since before the launch of the Apple Watch that wearables were the next growth market for Apple. So far, they’ve launched 2 of the 3 expected pieces: Apple Watch and AirPods. When Glasses are added, they’ll complete the trinity and the iPhone era will dawn.

Your Watch will be your primary device. AirPods and Glasses will complement it. A slab of glass in your pocket will be entirely optional.
Are you wearing Rose Glasses by any chance? iPhone sales made up 48% of all revenue for Apple this quarter. Usually it’s half. Company profits fell 13% because of the 12% decline in iPhone sales. Most of the services category/revenue is inherently tied to iPhone. Apple Music, App Store, AirPods etc. Take away the iPhone (as sales ads increasingly falling) and soon enough the entire Services category will collapse in on itself as well.
 

ipedro

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Are you wearing Rose Glasses by any chance? iPhone sales made up 48% of all revenue for Apple this quarter. Usually it’s half. Company profits fell 13% because of the 12% decline in iPhone sales. Most of the services category/revenue is inherently tied to iPhone. Apple Music, App Store, AirPods etc. Take away the iPhone (as sales ads increasingly falling) and soon enough the entire Services category will collapse in on itself as well.
It always kind of flusters me how people fail to think three dimensionally. The conditions that exist today are not necessarily the conditions that will exist in the future when changes happen. Further, these changes are incremental. None of this transition will happen instantly.

Of course, if you had said that Apple was going to kill the iPod overnight and replace it 1:1 with something untested (the iPhone), then of course the iTunes Store would have died because it relied on the iPod. Consequently, the halo effect that Apple had spent half a decade building around the iPod would have suffered as well, bringing down Mac sales with it.

Apple has been decentralizing its reliance on the iPhone. Apple Watch does Siri which Apple is bringing to third parties with Shortcuts, which is building up to a future of conversational UI for third party apps, bringing with it some of their revenue. Apple Watch also does Music, extending and preserving the Apple Music subscription outside of the iPhone sphere.

Apple is building out an ecosystem of hardware from the Watch (Siri apps, AppleMusic), to Apple TV (AppleTV+, Apple Arcade), to HomePod (AppleMusic, HomeKit), to iPad (AppleNews+) that will altogether, albeit over time, replace the iPhone's requirement in that ecosystem.

Glasses will be based on AR and an entirely new concept of applications that will derive from there, both existing and those that haven't been invented yet. In the same way that Uber or Instagram couldn't have existed without the iPhone, whatever apps that are coming for AR, will only exist because we're carrying around glasses that overlay apps onto the real world. This won't happen before Glasses, so we'll have to wait for that to develop after they're here.

The iPhone isn't going to disappear, it's just going to diminish in relevance and certainly in its central critical role to Apple's financial wellbeing. We're seeing that today with wearables growth and with services revenue at an all time high.
 
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majkom

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May 3, 2011
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It always kind of flusters me how people fail to think three dimensionally. The conditions that exist today are not necessarily the conditions that will exist in the future when changes happen. Further, these changes are incremental. None of this transition will happen instantly.

Of course, if you had said that Apple was going to kill the iPod overnight and replace it 1:1 with something untested (the iPhone), then of course the iTunes Store would have died because it relied on the iPod. Consequently, the halo effect that Apple had spent half a decade building around the iPod would have suffered as well, bringing down Mac sales with it.

Apple has been decentralizing its reliance on the iPhone. Apple Watch does Siri which Apple is bringing to third parties with Shortcuts, which is building up to a future of conversational UI for third party apps, bringing with it some of their revenue. Apple Watch also does Music, extending and preserving the Apple Music subscription outside of the iPhone sphere.

Apple is building out an ecosystem of hardware from the Watch (Siri apps, AppleMusic), to Apple TV (AppleTV+, Apple Arcade), to HomePod (AppleMusic, HomeKit), to iPad (AppleNews+) that will altogether, albeit over time, replace the iPhone's requirement in that ecosystem.

Glasses will be based on AR and an entirely new concept of applications that will derive from there, both existing and those that haven't been invented yet. In the same way that Uber or Instagram couldn't have existed without the iPhone, whatever apps that are coming for AR, will only exist because we're carrying around glasses that overlay apps onto the real world. This won't happen before Glasses, so we'll have to wait for that to develop after they're here.

The iPhone isn't going to disappear, it's just going to diminish in relevance and certainly in its central critical role to Apple's financial wellbeing. We're seeing that today with wearables growth and with services revenue at an all time high.
Dont know anyone who wear glasses if not necessary.. people in general dont wear anything over eyes if not necedsary.. so i do predict, smart glasses will be niche product
 

ipedro

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Dont know anyone who wear glasses if not necessary.. people in general dont wear anything over eyes if not necedsary.. so i do predict, smart glasses will be niche product
yeah... not like half the world wears sunglasses to look cool or anything.
 

manu chao

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Jul 30, 2003
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Are you wearing Rose Glasses by any chance? iPhone sales made up 48% of all revenue for Apple this quarter. Usually it’s half. Company profits fell 13% because of the 12% decline in iPhone sales. Most of the services category/revenue is inherently tied to iPhone. Apple Music, App Store, AirPods etc. Take away the iPhone (as sales ads increasingly falling) and soon enough the entire Services category will collapse in on itself as well.
The question is whether iPhone sales are falling because Apple is losing marketshare or because people keep their phones longer. If it is mainly the latter, then the size of the pool of people that Apple Music, the App Store, AirPods and the Apple Watch can tap into isn't much affected by falling iPhone sales. In fact, some people will simply redirect their cash from upgrading iPhones to buying (Apple) wearables and services (incl. apps). And while we don't know the numbers, Apple Music is available on Android and the vast majority of Apple and Beats headphones do work with Android (only cabled-ones with a Lightning plug don't). And for Beats, I'm pretty sure that they sell a healthy number of their products to Android users.
[doublepost=1564578411][/doublepost]
Dont know anyone who wear glasses if not necessary.. people in general dont wear anything over eyes if not necedsary.. so i do predict, smart glasses will be niche product
According to the first Google result, 61% of the population need glasses or contact lenses. Of course, a significant part of those don't want to wear glasses and use contact lenses instead.
[doublepost=1564578705][/doublepost]
If you had told people in 1990 that it would be acceptable for everyone to bring a camera into gym change rooms and for people to have cameras in their homes, they would have said it’s creepy. Our generation might still find it a bit unsettling but young people will completely adapt to the concept of having everything you see a potential shareable clip. We’ll just adjust to the idea that if you’re in public, you might be recorded. Privacy is behind closed doors.
And there already are cultural norms against staring, where you look in a bathroom shared with others (with men at least) and for example to actively avert your eyes when somebody is entering a passcode anywhere. I still don't think that's quite enough for AR glasses but we may get there.
 
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kasei

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I agree. The iPhone was the catalyst to changing how people communicate. The very idea of talking into a device has changed. You don't really need an iPhone to talk to someone. You can do it all on your Apple Watch. You add AR capable glasses and "The piece of glass in your pocket" is no longer needed. Siri in the cloud containing all of your contact info and one tap on your AirPods, you make a call or dictate a message. AR glasses will provide contextually relevant information automatically integrated into your perception of the physical world so rather than looking at a screen in your hand you are now free to engage the world around you while looking at it.
 
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dernhelm

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May 20, 2002
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Just bought an Apple Watch 4 with some unexpected bonus money. Who knew I was riding the new trend of purchasing wearables? :) And I'm still using an iPhone 6s (and perfectly happy with it).

Seriously, though, for me, the watch just finally became interesting enough to purchase. Certain things take a lot of iterations before they can hit the feature / price / functionality sweet spot to be attractive to a large segment. Kudos to Apple for sticking with it.
 

Classie

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Nov 3, 2018
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Dont know anyone who wear glasses if not necessary.. people in general dont wear anything over eyes if not necedsary.. so i do predict, smart glasses will be niche product
You probably don’t know it or don’t know the “right” people, but wearing glasses without prescription lenses is not that uncommon.
As for the future... Kids today don’t find glasses ugly or nerdy - they find them cool!
[doublepost=1564605769][/doublepost]
yeah... not like half the world wears sunglasses to look cool or anything.
Don’t forget that half the world needs glasses to see...
 
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DeepIn2U

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May 30, 2002
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Just as expected. I’ve been saying in this forum since before the launch of the Apple Watch that wearables were the next growth market for Apple. So far, they’ve launched 2 of the 3 expected pieces: Apple Watch and AirPods. When Glasses are added, they’ll complete the trinity and the iPhone era will dawn.

Your Watch will be your primary device. AirPods and Glasses will complement it. A slab of glass in your pocket will be entirely optional.
We here!

I’ve been staying this as well: The Watch with Glasses (retina recognition + voice + sign language control / gesture control) will be key.
[doublepost=1564653806][/doublepost]
I agree. The iPhone was the catalyst to changing how people communicate. The very idea of talking into a device has changed. You don't really need an iPhone to talk to someone. You can do it all on your Apple Watch. You add AR capable glasses and "The piece of glass in your pocket" is no longer needed. Siri in the cloud containing all of your contact info and one tap on your AirPods, you make a call or dictate a message. AR glasses will provide contextually relevant information automatically integrated into your perception of the physical world so rather than looking at a screen in your hand you are now free to engage the world around you while looking at it.
And screen time goes out the window lol.
 
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harriska2

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Mar 16, 2011
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I walk my husband to work every morning and would love smart glasses to record the idiots who almost run us over when we are crossing the streets. They are often on their phone. We’ve actually been able to see down into the driver’s lap of a car going 30 as we were half way across the street.
 

I7guy

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Nov 30, 2013
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Gotta be in it to win it
It always kind of flusters me how people fail to think three dimensionally. The conditions that exist today are not necessarily the conditions that will exist in the future when changes happen. Further, these changes are incremental. None of this transition will happen instantly.

Of course, if you had said that Apple was going to kill the iPod overnight and replace it 1:1 with something untested (the iPhone), then of course the iTunes Store would have died because it relied on the iPod. Consequently, the halo effect that Apple had spent half a decade building around the iPod would have suffered as well, bringing down Mac sales with it.

Apple has been decentralizing its reliance on the iPhone. Apple Watch does Siri which Apple is bringing to third parties with Shortcuts, which is building up to a future of conversational UI for third party apps, bringing with it some of their revenue. Apple Watch also does Music, extending and preserving the Apple Music subscription outside of the iPhone sphere.

Apple is building out an ecosystem of hardware from the Watch (Siri apps, AppleMusic), to Apple TV (AppleTV+, Apple Arcade), to HomePod (AppleMusic, HomeKit), to iPad (AppleNews+) that will altogether, albeit over time, replace the iPhone's requirement in that ecosystem.

Glasses will be based on AR and an entirely new concept of applications that will derive from there, both existing and those that haven't been invented yet. In the same way that Uber or Instagram couldn't have existed without the iPhone, whatever apps that are coming for AR, will only exist because we're carrying around glasses that overlay apps onto the real world. This won't happen before Glasses, so we'll have to wait for that to develop after they're here.

The iPhone isn't going to disappear, it's just going to diminish in relevance and certainly in its central critical role to Apple's financial wellbeing. We're seeing that today with wearables growth and with services revenue at an all time high.
There must be several people that have shorted the stock and have huge margin calls.
 
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