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Apple's Wearables Segment Is Now a $20.8 Billion Business

By Evan Niu, CFA - Jan 30, 2020 at 9:00AM

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Or in CEO Tim Cook's words, "the size of a Fortune 150 company."

Please stop, Tim Cook. The Apple (AAPL 1.30%) CEO continues to provide roundabout disclosures regarding the company's booming wearables business, comparing it to various rankings in the Fortune 500. Translating those comparisons into actual dollar amounts may only require an arbitrary amount of work -- about the same as converting the figures into distances to the moon -- but it's an unnecessary and frustrating step. Furthermore, the Fortune 500 rankings change every year, rendering the comparisons obsolete over time.

Cook's latest disclosure came this week after the Mac maker reported blowout fourth-quarter earnings. Apple's wearables business is now the size of a Fortune 150 company.

Woman wearing Apple Watch and AirPods while using her iPhone

Image source: Apple.

Translation: Wearables is now a $20.8 billion business

Cross-referencing the latest Fortune 500 rankings, No. 150 is chipmaker Broadcom, with $20.8 billion in trailing-12-month (TTM) revenue. The previous disclosure was in October, when Cook said, "Our Wearables business showed explosive growth and generated more annual revenue than two-thirds of the companies in the Fortune 500." That's a convoluted way of saying the wearables segment was the size of a Fortune 167 company, with $18.9 billion in TTM revenue.

Here are all of Cook's comparisons for the wearables business to date. These translations represent the respective Fortune 500 rankings for when the comments were initially made.



Revenue Threshold

Q1 2017

Fortune 500

$5.1 billion

Q3 2017

Fortune 400

$6.7 billion

Q1 2018

Fortune 300

$9.3 billion

Q4 2018

Fortune 200

$14.6 billion

Q3 2019

Fortune 167

$18.9 billion

Q4 2019

Fortune 150

$20.8 billion

Data sources: Apple and Fortune. Calendar quarters shown.

The original Apple Watch was launched in April 2015, and represented the tech giant's official entry into wearable gadgets. Apple's other breakout wearable, AirPods, were released in December 2016 following a minor delay. In no uncertain terms, the growth of the company's wearables revenue has been astounding, topping $20 billion in just under five years.

Chart showing wearables revenue

Data sources: Apple and Fortune. Chart by author.

That also means that wearable products (as expected) represent the bulk -- over 75% -- of the broader wearables, home, and accessories segment, which has brought in $27.2 billion in TTM revenue. It's not as if Apple has much going on in smart home technology, and accessories are by definition minor purchases.

Better yet, the wearables business still has plenty of room to run: Apple is currently struggling to meet demand for AirPods Pro; 75% of Apple Watch customers are new to the product, suggesting that adoption is still in the early innings; selling the older Apple Watch Series 3 at the lower price point of $199 is helping the company address more mainstream consumers.

Cook added, "Both AirPods and Apple Watch were must-have holiday gifts helping drive unprecedented results for the category even as we face supply constraints for Apple Watch Series 3 and AirPods Pro."

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