Apple Watch + AirPods > Macintosh

Earlier today, Apple revealed in a blowout earnings report that revenue for the “Wearables, Home and Accessories” category, which includes Apple Watch + AirPods, is larger than Mac revenue for the first time.

Apple Watch Series 5 in space black titanium.
Apple Watch Series 5 in space black titanium.
Kif Leswing for CNBC:

Apple’s catch-all category, which includes AirPods and Apple Watch among a bundle of other items such as accessories sold at Apple stores, surged to $10 billion in revenue in the quarter that ended in December. That’s more than the $7.1 billion Apple generated from selling Mac computers.

While Apple doesn’t break out Apple Watch or AirPods revenue individually, [Apple CEO] Cook added that Apple Watch sales hit a record during the quarter. He also said that “Wearables,” which includes those two products plus Beats headphones, would be a Fortune 150 company, implying it would generate about $20 billion in revenue per year.

MacDailyNews Take: Apple’s “Wearables, Home, and Accessories” category grew 37% YOY. Mac was down 3%. Still $7.1 billion in 90 days is nothing to sneeze at! (For reference, iPad brought in $5.977 billion in the quarter.)

With each Apple product that a customer buys, I think they get tighter into the ecosystem. That’s the reason that they’re buying into it. Because they like the experience, the customer experience, and so from that point of view I think each of our products can drive another product. I would think in that case it’s more likely that the iPhone comes first, but there’s no doubt in my mind that there’s some people that came into the ecosystem with the Watch.Apple CEO Tim Cook, January 28, 2020


    1. Exactly so. Just go over to MacRumors or any other equivalent site and see that they only recommend buying a Mac Pro or 16″ MacBook Pro right now.

      Additionally, if Apple were to announce and ship new Macs within days, or at most a few weeks, of the introduction of new chips or new standard, Mac sales would increase very significantly. Unfortunately, within the last five or so years Apple first ships Macs with technology that is all too often up to a year old (including the Intel chips inside).

      The other factor in the Mac’s laggard sales has been the dogged pursuit of form over function, e.g., trashcan Mac and thinness driving the butterfly keyboard. While form is important, it should never have been the paramount aspect of the Mac.

      If Apple paid half as much attention to their Mac line as they do either the wearable or iPhone lines Mac sales would be doing much, much better.

  1. So lets put this into some context. The reason that iPhone sells 10s of millions units per quarter is that there is a larger market for phones than PCs. The same goes for Apple watches and AirPods. With the average ASP for the Mac being around $1400 and for the watch / AirPods around $150 / $ 300. Combined they only have to sell 5 times as many Apple Watch and AirPods to match Mac revenue.
    So is it a surprise that now that AppleWatch and AirPods are mainstream that they do outstrip Macs in revenue? Apple have 5% market share in PCs but it is not realistic to think they will ever get to 20% worldwide and the unit volume is never going to match wearables or mobiles.
    Lets put it this way. Back in the early 1998, Macs were the only product Apple really had. They were very smart to create other product lines, first the iPod, then iPhone, iPad, etc). They had to innovate outside of PCs in order to grow the company. Aren’t we glad they did…..

  2. I agree with others. This is not surprising at all. They finally put resources to get a machine out for the professionals after 5 years. Other Mac products have not been kept up-to-date. The Mac marketplace is much smaller so the opportunties are much greater in the wearable market. If they really want the Mac market to grow they will need to put some real resources into going after the middle computer market. It has kind of been left alone. I’m surprised the Mac’s are doing as well as they are.

    1. How about just barely shy of six years (2182 days), not five.

      I’m not surprised Macs are doing OK. Anyone who has to routinely use Macs, Windows machines, Linux machines, UNIX machines, and the rest of the niche players out there would rather be using the Mac interface than any of the rest. Well, anyone other than masochists or people whose livlihood 100% depends on their using a non Mac OS.

  3. I’d really like to see Apple use AMD CPUs to bring out some “budget” Macs.

    I strongly believe the Mac division can grow if they stop pricing all the customers out. Of course, they also need increase the rate at which the systems are updated.

  4. The Mac is the glue that binds this ecosystem together. If you don’t use your Mac as the hub for these devices, then there is nothing to stop you from switching brands when the next “New” shinny thing comes along.

    1. Agreed; I’m still using an 8-year-old MacBook Pro that runs just fine (with maxed-out RAM and a newer SSD), and have purchased several iPhones and 2 Apple Watches over the same period.

  5. 2019 was the first year Apple acted publicly serious about the Mac in the last three or four years at least.

    And it shows, in terms of buzz and actual products delivered.

    If they bring the rest of the portables line up to the MBP16 level – better keyboard, better screens with less bezels, better sound -#no!!!sa@!!@,. :. and refresh the long in the tooth iMac design those steps alone should be enough to leisure ways of upgrading that would revive sales growth for a bit.

    But they also need to rethink more about what they’doing with their personal computers if they care about keeping momentum going.

  6. I believe that if Apple is selling 30 billion worth of Macs per year, they could easily sell 50-60 billion worth of Macs per year with more timely updates and a “corporate box” with replaceable memory, storage, graphics cards and a few pci slots.

    To leave 20+ billion on the table doesn’t seem to be the smartest thing to me.

  7. Well DUH, when the value has dropped over the years, especially on the portable line, where entry-level (MBA and 13″ MBP) only gets you a measly 128 GB storage… the same as the entry-level almost eight years ago.

    I got my parents a 2019 13″ MBP to replace their 2015 MBA because 128 GB wasn’t enough local storage anymore, and between scamming us on storage and still having the crappy butterfly keyboard, it was the absolute most reluctant Apple purchase I ever made.

  8. The Mac business model is finally hitting home. I invested several thousand dollars in the 2014 5K iMac 5 years ago. It now runs perfectly fine, but has slowed dramatically in recent versions of Adobe Lightroom (not casting shade, its a fact) to the point I needed to improve that performance.

    The Mac market does not offer a product for the hobbiest/enthusiast such as myself. The entry level iMac is not as capable, nor would it have the longevity to justify the shelf price. The higher end spec iMacs are just too expensive. If I was earning a living with this, so be it, eat the cost. But a perfectly good 5K iMac can’t get binned for a brand new one for a bit performance gain.

    The ideal world would include an upgrade path. The iMac hasn’t changed all that much, why not offer an internal parts upgrade for a fair price? The display is the expensive part, right? Its perfectly good. A new motherboard/CPU/GPU/RAM would be welcome, and I’d happily pay for it.

    As it is, after a very though rough analysis, I built a VERY powerful PC for that 1500US, which has an upgrade path, that I have moved my photo processing workflow onto. So now I have the PC monitor sitting next to my iMac.

    I have 2 colleagues in this exact situation, wondering what to do.

  9. Not a good sign for the Mac market. PC sales were up this year. Mac sales were down 3% with new MacBook Pros and the Mac Pro being released. iPad sales were over a billion less than the Mac.

    What does this mean?

    Customers are not abandoning the Mac for iPads as has been hypothesized. Nor are customers abandoning the Mac for Windows 10 in mass. However, there appears to be some slippage toward Windows 10.

    I suspect Apple was hoping to get Mac users to switch to iPads with higher profit margins. This does not appear to be happening. What is happening is a slow slippage in the Mac market.

    How to fix? Ideas?

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