Jason Snell’s Notes on Apple’s Latest Record Quarter

Jason Snell:

Apple’s wearables business is clearly successful and growing rapidly, as expressed in the Wearable/Home/Accessories category’s rapid growth. It was $10 billion in revenue for that category this quarter, up 37 percent from the year-ago quarter and marking 12 straight quarters of 20+% growth.

Apple provided a few fun tidbits in its description of what’s going on inside the Wearable/Home/Accessories bundle. Apple Watch set a new revenue record, though Apple won’t say what that record is. Perhaps more interesting even than that, the company claimed that 75 percent of Apple Watch purchases were from people who were new to the product.

75 percent new customers is a huge number, and suggests strongly that Apple Watch has come nowhere close to peaking yet. Not surprising to me, though. Most people will buy an Apple Watch and wear it for years.

Apple Watch sales aren’t all about the Series 5, either. Cook said that Apple couldn’t make enough of the $199/$299 Apple Watch Series 3. That’s a fascinating tidbit, because it suggests that — like the iPhone SE before it — Apple underestimated the amount of demand that its customers might have for a lower-priced, entry-level product. At $199, the Apple Watch Series 3 is priced similarly to a bunch of other fitness trackers — and it seems to have found some traction there.

Also not surprising to me at all, except for the fact that Apple didn’t accurately forecast demand. Of course the Series 3 is going to be insanely popular: that $200 price point is a major threshold for what typical people think a good watch should cost. I wouldn’t be surprised if come September, the Series 3 stays around for another year and drops to $149/179 (for 38/42mm), but $199/229 is a great base price.

Wednesday, 29 January 2020