Apple Watch so huge, it has eclipsed 'peak iPod'

Posted:
in AAPL Investors
With availability of Apple's AirPods Pros evaporating into the holiday shopping season driving up the entire wearables category for Apple, sales of the Apple Watch alone have eclipsed that of the company's iPod during its peak in popularity.

AirPods Pro in their box
Boxed AirPods Pro. Good luck finding them before Christmas


In a research note seen by AppleInsider, Asymco Analyst Horace Dediu uses some proprietary data modeling, and looks at the past and present sales figures of Apple's wearables, home, and accessories categories over the last 15 years. Given what Apple has said and left clues about across the years, Dediu concludes that Apple has passed "Peak iPod" with the Apple Watch alone, in this holiday quarter.

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

And, neither growth nor revenue are showing signs of decreasing year-over-year. Dediu is expecting a 51% year-over-year increase for wearables, with a 24% increase just in the Apple Watch alone. If his predictions are correct, this makes the Apple Watch a $5.2 billion revenue source by itself.
Remember that iPod was the phenomenon which reset all expectations for Apple. It caused Apple to cease calling itself Apple Computer. It (at least psychologically) laid the foundation for iPhone and everything else that followed. In 2005 and through 2007 Apple was 'the iPod company.' I remember people working in a large search engine company calling Apple 'that media company' as a result of over-intellectualizing iTunes.





Dediu believs that the wearables division is Apple's next big revolution, and has been for some time. And, it will "decidedly overtake the Mac, having already passed the iPad" given enough time. He is grouping it in with the Mac as a whole, the Apple II, and the iPhone as a product dismissed as inconsequential that turns out to be a big, market-moving product.

"It's the asymmetry of humility that this happens over and over again," says Dediu.

After years of rumors, the Apple Watch debuted in 2015 as a fashion-focused accessory to mostly tepid reviews. A refocus on health and well-being for the during the Series 1 refresh sparked product sales, leading to sell-outs of Apple Watch stock and limited availability during release quarters.

Apple announced AirPods Pro on October 28, featuring Active Noise Cancellation and improved sound. The $249 earbuds rely heavily on Apple's H1 chip, with the company saying that the extremely low audio processing latency of H1 enables real-time noise cancellation, delivers high-quality sound using adaptive technology, and responds to hands-free "Hey Siri" requests -- all simultaneously.

At present, Apple's AirPods Pro are sold out at Apple.com through early January.
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Comments

  • Reply 1 of 36
    thttht Posts: 4,723member
    The AR glasses, another wearable, could be quite the game changer, and put the wearables category into the iPhone space in terms of revenue. Some fashion challenges involving wearing glasses in the first place, but the make or break will be what features and functions it can provide to users. If they are good, AR glasses could be as common at sun glasses.
    fastasleepwatto_cobra
  • Reply 2 of 36
    and the Watch has really only just gotten started. Loads of untapped potential.

     I've spoken to more than one person who has expressed the desire to get an Apple Watch as a full-on phone replacement. One was an Android user who would was ready to pull the trigger before I explained that it was still technically an iPhone accessory.

     Anyone want to place bets against the next WatchOS going fully untethered?
    edited December 2019 razorpitwatto_cobrasteveau
  • Reply 3 of 36
    lkrupplkrupp Posts: 10,341member
    tht said:
    The AR glasses, another wearable, could be quite the game changer, and put the wearables category into the iPhone space in terms of revenue. Some fashion challenges involving wearing glasses in the first place, but the make or break will be what features and functions it can provide to users. If they are good, AR glasses could be as common at sun glasses.
    No. The public simply will not accept these things as normal. Remember Google Glass and the glass-holes. We already have people falling down escalators and into water fountains while playing on their phones. Imagine what AR glasses would add to that mix.
  • Reply 4 of 36
    I don’t know if it offers actual protection but when I am using my AirPods pro and there is a sudden loud noise the noise canceling feature turns on automatically 
    watto_cobragilly33steveau
  • Reply 5 of 36
    GG1GG1 Posts: 483member
    Eric_WVGG said:
    and the Watch has really only just gotten started. Loads of untapped potential.

     I've spoken to more than one person who has expressed the desire to get an Apple Watch as a full-on phone replacement. One was an Android user who would was ready to pull the trigger before I explained that it was still technically an iPhone accessory.

     Anyone want to place bets against the next WatchOS going fully untethered?

    I see two main directions for Apple Watch: phone replacement (as you said) and health monitor.
    watto_cobra
  • Reply 6 of 36
    lkrupplkrupp Posts: 10,341member
    It bears repeating what the tech blog crowd said about the Apple Watch when it was announced. I wish AI would republish those comment threads so we can remind ourselves of who the complete idiots who sling their negativity around here constantly are. 
    watto_cobralostkiwi
  • Reply 7 of 36
    lkrupp said:
    tht said:
    The AR glasses, another wearable, could be quite the game changer, and put the wearables category into the iPhone space in terms of revenue. Some fashion challenges involving wearing glasses in the first place, but the make or break will be what features and functions it can provide to users. If they are good, AR glasses could be as common at sun glasses.
    No. The public simply will not accept these things as normal. Remember Google Glass and the glass-holes. We already have people falling down escalators and into water fountains while playing on their phones. Imagine what AR glasses would add to that mix.
    Try telling that to Scoble.  He's the biggest champion of AR / VR that I've ever seen.  On a side note, tech companies are pouring billions of R&D money into AR (Apple included) so there must be something there.
    edited December 2019 watto_cobra
  • Reply 8 of 36
    It was interesting when the iPod model which could be worn like a watch came out. It told the future.

    I’m not a watch wearer but each new generation of Apple Watch brings me closer to saying yes, I want one. It’s not if but when.
    watto_cobrasteveau
  • Reply 9 of 36
    mike1mike1 Posts: 3,135member
    lkrupp said:
    tht said:
    The AR glasses, another wearable, could be quite the game changer, and put the wearables category into the iPhone space in terms of revenue. Some fashion challenges involving wearing glasses in the first place, but the make or break will be what features and functions it can provide to users. If they are good, AR glasses could be as common at sun glasses.
    No. The public simply will not accept these things as normal. Remember Google Glass and the glass-holes. We already have people falling down escalators and into water fountains while playing on their phones. Imagine what AR glasses would add to that mix.
    I believe that the use case(s) that will drive real volume for AR glasses has not yet been defined. Apple may launch a product that makes everybody eventually see these things as necessary rather than just a niche gaming product.

    watto_cobra
  • Reply 10 of 36
    thttht Posts: 4,723member
    lkrupp said:
    tht said:
    The AR glasses, another wearable, could be quite the game changer, and put the wearables category into the iPhone space in terms of revenue. Some fashion challenges involving wearing glasses in the first place, but the make or break will be what features and functions it can provide to users. If they are good, AR glasses could be as common at sun glasses.
    No. The public simply will not accept these things as normal. Remember Google Glass and the glass-holes. We already have people falling down escalators and into water fountains while playing on their phones. Imagine what AR glasses would add to that mix.
    Try telling that to Scoble.  He's the biggest champion of AR / VR that I've ever seen.  On a side note, tech companies are pouring billions of R&D money into AR (Apple included) so there must be something there.
    Yes, I’m very aware of Google Glass and its issues, and Scoble’s craziness too. Like I said it will depend on features, the design and how well they are implemented.

    Cook is making similar statements about AR being interesting just like when he said the wrist was an interesting space in 2012 or 2013, and Gurman said they are doing it. They are spending a large amount of resources to see if they can ship something, and seem to be getting closer and closer. In many ways, what they learn from trying build one can affect their other products, so, it is a good exercise even if they don’t ship anything.

    There is a rumor that the 2020 or 2021 iPhone will be notchless, with the Face ID and front cam sensors shrunk to fit inside something like a 5 mm bezel. Or imagine the 2018 iPad Pro, but with half the bezel width, and the Face ID sensors and front cam shrunken to match. If true, this makes me think there is some commonality with AR glasses as it would need such miniaturization? Or the rumors of a camera on the Watch, for like FaceTime video. All this miniaturization would go into glasses too.

    The miniature projector will be the big one, well, a really really small projector will be the big piece of hardware to get right. Not many rumors of that though. It will be what makes or breaks the product. Just thinking about how it can augment your Mac or iPhone displays is really interesting, and it would be an industry game changer if it is good enough.
    fastasleepwatto_cobra
  • Reply 11 of 36
    dewmedewme Posts: 4,649member
    The feeling of untethered liberation one feels when using the Apple Watch with AirPods to listen to music is hard to describe.

    I was thinking last night that it would be kind of cool if Apple released an update to the iPod Nano, perhaps called the iPod Pico, that would be based on the AirPods Pro platform with several gigs of music storage directly on the headphones. No other device required once the "Pico" is loaded, not even an Apple Watch. Of course the UX would be via Siri and taps on the Pico.
    edited December 2019 watto_cobra
  • Reply 12 of 36
    hexclockhexclock Posts: 1,089member
    Eric_WVGG said:
    and the Watch has really only just gotten started. Loads of untapped potential.

     I've spoken to more than one person who has expressed the desire to get an Apple Watch as a full-on phone replacement. One was an Android user who would was ready to pull the trigger before I explained that it was still technically an iPhone accessory.

     Anyone want to place bets against the next WatchOS going fully untethered?
    Some of that untapped potential may come from Fitbit users that are uncomfortable with Google collecting their health information. I’m sure Google says they won’t, but come on... it’s Google. Waiting for Gator to set me straight ;)
    GeorgeBMacwatto_cobralostkiwientropyspscooter63
  • Reply 13 of 36
    lkrupp said:
    We already have people falling down escalators and into water fountains while playing on their phones. Imagine what AR glasses would add to that mix.
    There’s a significant difference between looking down at a screen and looking forward through a screen. 
    watto_cobracoolfactorphilboogie
  • Reply 14 of 36
    lkrupp said:
    It bears repeating what the tech blog crowd said about the Apple Watch when it was announced. I wish AI would republish those comment threads so we can remind ourselves of who the complete idiots who sling their negativity around here constantly are. 
    Perhaps an entertaining but less vindictive idea would be an AI feature that would collect commentary - minus the attribution -  from the times immediately following the introduction of various products over the years. I suspect the comments could be categorized thematically, demonstrating how consistently unoriginal the 'haters' are as each new item is introduced. If created, perhaps they could put a pin in it for easy reference. Then, as future items are introduced to inevitable pronouncements of doom and failure, it would be easy to respond with links to the applicable categories of prior critiques.
    watto_cobra
  • Reply 15 of 36
    thttht Posts: 4,723member
    dewme said:
    The feeling of untethered liberation one feels when using the Apple Watch with AirPods to listen to music is hard to describe.

    I was thinking last night that it would be kind of cool if Apple released an update to the iPod Nano, perhaps called the iPod Pico, that would be based on the AirPods Pro platform with several gigs of music storage directly on the headphones. No other device required once the "Pico" is loaded, not even an Apple Apple. Of course the UX would be via Siri and taps on the Pico.
    Yup. Did the Watch+JayBird Vista thing this morning’s run. Not having your phone with you makes a pretty big difference here.

    Well, I’m confused about what you are saying. At some point, Apple can put 4, 8, 16 GB of NAND in the AirPods, ship an AirPods app like the iOS Watch app, and people can transfer audio to the AirPods. So, yes, the may go there if it is more efficient than streaming from the host device, and if there is a market of people who want to go around with just AirPods.

    Not sure what you mean by iPod Pico, other it just being AirPods with user addressable storage in it. I do think an Apple Music specific client device would be an interesting product. You buy the product, no contracts, no dealing with the carrier, enter your Apple Music credentials, and away you go. The monthly Apple Music subscription pays for the cellular data service (like Kindles cellular data). A modern iPod like device, that gets all its playable content from Apple Music, and maybe podcasts too.
    watto_cobra
  • Reply 16 of 36
    dewmedewme Posts: 4,649member
    tht said:

    Not sure what you mean by iPod Pico, other it just being AirPods with user addressable storage in it. I do think an Apple Music specific client device would be an interesting product. You buy the product, no contracts, no dealing with the carrier, enter your Apple Music credentials, and away you go. The monthly Apple Music subscription pays for the cellular data service (like Kindles cellular data). A modern iPod like device, that gets all its playable content from Apple Music, and maybe podcasts too.
    Exactly, just like Apple calls what is essentially an iPhone without a phone an iPod Touch, an AirPod Pro without the need for a connected device would be called an iPod Pico (which means smaller than a nano). But yeah, the hardware functionality and form factor is exactly as you've described, a set of AirPod Pros with embedded music storage and a voice based UX that does not rely on an Apple Watch or any iOS device. Better yet, put a variation of iOS on the AirPods (AirPodOS) so you can run different voice-only apps on the AirPods, for example on-the-fly spoken language translation, with no need to have a separate device present once the apps are loaded. This seems like a logical branch to the iOS platform. AR in the visual domain is obviously in Apple's future, but they have by no means maxed out the possibilities on the audible side, including audible AR. 

    watto_cobra
  • Reply 17 of 36
    lkrupp said:
    tht said:
    The AR glasses, another wearable, could be quite the game changer, and put the wearables category into the iPhone space in terms of revenue. Some fashion challenges involving wearing glasses in the first place, but the make or break will be what features and functions it can provide to users. If they are good, AR glasses could be as common at sun glasses.
    No. The public simply will not accept these things as normal. Remember Google Glass and the glass-holes. We already have people falling down escalators and into water fountains while playing on their phones. Imagine what AR glasses would add to that mix.
    Generally, I agree. But if we know anything about Apple, it's that they won't implement it until and unless they knock it out of the park.  None of this "have the market beta test" mess.
    StrangeDayswatto_cobra
  • Reply 18 of 36
    I never wanted an Apple Watch seems like replicating my iPhone not to mention another device to charge. I don't wear a watch at all
  • Reply 19 of 36
    ArcaSwiss said:
    I never wanted an Apple Watch seems like replicating my iPhone not to mention another device to charge. I don't wear a watch at all
    Thanks for letting everyone know. 
    StrangeDayswatto_cobra
  • Reply 20 of 36
    My AW4 has become as integral to me daily as my iPhone. 
    edited December 2019 watto_cobracoolfactorpscooter63
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