Why the Apple Watch is important for Apple
How the world’s most popular smartwatch will become even more critical to Apple.
In 2019 (Oct. 2018-Oct.2019), Apple (AAPL) generates about $260 billion in revenue. While the iPhone generated about 54% of the whole revenue, one of the fastest-growing lines of business is Apple’s Wearables, Home, and Accessories branch.
This line of business includes accessories like the AirPods and AirPods Pro and wearables like the Apple Watch. Sales of the smartwatch increased by 36% in 2019, which leads to an estimated 31 million units shipped.
Thirty-one million units are more than the entire Swiss watch industry managed to sell in 2019 and is by far the most sold smartwatch.
The increase in demand is easy to understand. Apple has created a product that appeals to many different customer groups for various reasons.
For the younger generation, the Apple Watch is the “smartest” smartwatch. While it does not have a long battery life compared to other smartwatches, it is the most computerized watch and perfectly fits the Apple ecosystem. Hence, the younger customer base is attracted by the seamless integration into their existing network of devices and likes the features like replying to texts and answering calls.
The older generation does not care that much about how computerized a watch is, as long as they can read the time and answer a call from time to time. However, the health features of the Apple Watch have a unique appeal to the older customer base. The Apple Watch was one of the first to introduce ECG (electrocardiogram) to smartwatches. It features fall detection and functions as an everyday fitness tracker. The fall detection is another feature that is especially appealing to an older customer base. The feature can provide the user with an additional safety feeling because the user knows if he fell, the watch would call emergency services.
With the Apple Watch, the California company has created a product with a broad appeal that can be used for various occasions. More important, however, it has hit the nerve of time.
Over the last few years, iPhone sales share compared to the company’s total revenue has declined. Especially services and wearables, home and accessories have gained in popularity and significantly grown in revenue. A massive part of the success of the latter branch can be attributed to the successful Apple Watch.
With the further interweaving of technology and health, the Apple Watch should only gain Apple’s priority as it is the device with the most health features in Apple’s product portfolio. The smart watch’s success can be attributed to its unique feature set, as there is no other smartwatch that provides all the fitness and health features of the Watch, whereas there is no fitness-tracker that is as “smart” as the Apple Watch.
People looking to invest in Apple shares long term should pay close attention to the Apple Watch’s development as it grows in influence in Apple’s yearly revenue.
As always, I am happy to be part of your decision-making process before investing. However, I am no financial advisor and strongly recommend researching your own before investing your money.
Stay safe
Raffael
