Thursday, December 12, 2019

Apple Watch and AirPods Have Overtaken Peak iPod

Horace Dediu:

This analysis helped me conclude the Apple Watch overtook the historic “peak iPod” which occurred in the fourth quarter of 2007 at $4 billion. My Watch revenue estimate was $4.2 billion in the fourth quarter of 2018.


Looking forward to the next quarter, I am expecting a 51% increase y/y for Wearables and 24% growth in Watch. This results in a Watch revenues about $5.2 billion and non-Watch $5.7 billion. Now if we assume $1.7 billion for non-Watch-non-AirPods (i.e. Apple TV, HomePod, Beats, iPod, other) then this quarter AirPods will have overtaken peak iPod.

Update (2020-01-08): Kevin Rooke:

Imagine a startup with $12 billion of revenue, 125%+ YoY revenue growth (two years in a row), and Apple-esque gross margins (30-50%). Without knowing anything else about the business, what would you value it at? $50 billion? $100 billion? More?

That’s Apple’s AirPods business, the fastest-growing segment of the world’s most valuable company.


This is what AirPods revenue looks like compared to some of the world’s top tech companies. AirPods make as much money as Spotify, Twitter, Snap, and Shopify combined.

Neil Cybart (Hacker News):

AirPods revenue does not exceed Spotify, Twitter, Snapchat, and Shopify revenue. It’s not even close either.


Not surprisingly, nearly every financial metric found in this screenshot is wrong. The assumptions about AirPods sales mix are wrong too.

Update (2020-01-10): Jason Snell:

So when you read about Tim Cook emphasizing Services and Wearables to financial analysts or in a quick interview on CNBC come January 28—this is why. In less than half a decade, Services and Wearables have gone from afterthoughts to a third of Apple’s business.

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Dediu's comparison only works if you ignore inflation, which seems like a pretty glaring oversight.

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