As usual, Apple (NASDAQ:AAPL) played Apple Watch metrics close to the chest when it reported fiscal first-quarter earnings last week. "It was our best quarter ever for the Apple Watch, with over 50% growth in revenue and units for the fourth quarter in a row and strong double-digit growth in every geographic segment," CEO Tim Cook said on the earnings conference call. "Sales of Apple Watch Series 3 models were also more than twice the volume of Series 2 a year ago."
That's all the official information that investors have to go on. Fortunately, market researcher Canalys has just released its estimates for how Apple Watch fared in 2017.
18 million and counting
According to Canalys, unit volumes soared 54% to 18 million for the year, including 8 million Apple Watches in the fourth quarter alone. Last quarter's performance was the best quarterly unit volume for any wearable vendor to date.
Adding cellular connectivity to Series 3 has helped boost demand for the newest models, with cellular-equipped models comprising 13% of all Apple Watch shipments throughout 2017, even though those models launched at the end of September. Canalys calls the Series 3 the "fastest-selling LTE wearable on the market," with volumes hitting 1.6 million in the fourth quarter.
There may still be more upside going forward, as wireless carriers in some markets don't offer the device yet. Major carriers in the U.S., Japan, and Australia offered Series 3 models throughout the holiday shopping season.
No one knows what kind of average selling price (ASP) Apple Watch commands, but at a hypothetical $500 ASP, those 18 million units would represent $9 billion in revenue -- over 60% of the $14.3 billion in "Other products" revenue in 2017.
Series 3 is a hit
The strong performance of Series 3 is in stark contrast to how Series 2 performed last year. Apple Watch unit volumes in 2016 had declined modestly from 2015 levels, despite the fact that the original Apple Watch launched in April 2015 and the company released the second-generation models in 2016.
However, it's worth noting that Apple has also made meaningful progress on the software front, improving watchOS and adding more and more features over time to older models. watchOS 3 in particular was a significant update that was released at the tail end of 2016. More recently, adding GymKit in watchOS 4 is also driving demand, Canalys claims.
According to Canalys analyst Jason Low, "Apple has won the wearables game."
Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.