Every year seems to bring a few new buzzwords to remember. This year it’s Wearables, a new revenue category that Apple invented. Wearables? Think of it as, oh, I don’t know– maybe something you wear. Like Apple Watch, Apple AirPods, Beats headphones, et al.
Wearables is now about as big as the iPad and not that far from bringing in as much revenue as the Mac. It might even top the Mac during the holiday quarter if Apple could make enough AirPods.
So, how is wearables an example of craziness?
Wearables increased almost 100-percent over last year’s shipments, and double that for Apple– Watch, AirPods, et al. So, yes, Wearables as a technology product category is kind of exploding right now.
There might be 4-billion smartphone customers on planet earth, and Apple has only 1-billion, so a customer base of about 30-percent or so. Yet, Apple owns the Wearables category, which means Android smartphone customers are not buying smartwatches or wireless earbuds in the same volume as Apple customers.
Because buzzwords are important we need to remember that a subset of Wearables is called Hearables. All Hearables are Wearables, but not all Wearables are Hearables, although I can hear my Apple Watch.
Who leads the Hearables market?
Probably not Apple, because Hearables can be dirt cheap, and the AirPods maker doesn’t sell cheap earbuds or headphones. That means most of the revenue and profits for Wearables and Hearables are grabbed by Apple– whose customer base is the smallest– and the crumbs are grabbed by Android customers.
This is Apple’s modus operandi. The company grabs the premium end of the product spectrum. Why? That’s where the money is. Marketshare means diddly squat to Apple. Product marketing is all about gross margins.
What seems to be happening is that Apple recognizes the smartphone industry has reached a saturation point– it won’t be growing much until there is some newfound breakthrough that excites the masses. So, in the meantime, Apple will milk the hardware for all it’s worth, grow the customer base, and find more Services and Wearables (and Hearables) to make money.