Growing wearables market
The global wearables market has been on an upward trajectory in both the fourth quarter and full-year 2017 with total shipment volumes reaching 37.9 million units in 4Q17 and 115.4 million units in 2017, as per IDC. Moreover, Apple (AAPL) became the biggest shipper of wearables in both the quarter and the year, owing to the surge in smartwatch shipment volumes. According to data from the International Data Corporation (or IDC), Apple moved past competitors Fitbit (FIT), Garmin (GRMN), and China’s (MCHI) (FXI) Xiaomi, and Huawei.
Growth in Apple Watches
According to the company, after iPhones, Apple’s largest source of revenue remains its wearables category, which grew 70% on a year-over-year basis in fiscal 1Q18. Apple’s wearable category includes the Apple Watch, AirPods, and Beats headphones, but only the Apple Watch is showing 50% or more growth in shipments and revenues since in the last four quarters. In fiscal 1Q18, Apple Watches grew 50% year-over-year by shipments. According to Canalys, Apple sold more than 18 million units of Apple Watches in 2017, up 54% from 2016.
The sales growth in Apple Watches was driven by Apple Watch Series 3 models, which grew more than double the volume of Series 2 a year ago. Launched in November 2017, Apple’s Series 3 Watch came with the LTE (long-term evolution) connectivity feature, which is not available on any other smartwatch yet.
The expected launch of Watch Series 4
Apple is also reportedly seeking to launch Watch Series 4 in the third quarter of 2018, according to 9to5Mac. According to KGI analyst Ming-Chi Kuo, the new Apple Watch model is rumored to have a 15% larger display, enhanced health monitoring, and longer battery life. Moreover, the analyst also expects the new model to come in at lower prices than older models.
Further, KGI expects to sell nearly 30% more Apple Watch units to about 22 million to 24 million units in 2018 compared to last year. Moreover, analysts project Watch sales to reach 50 million units a year in the long term. These factors are expected to keep Apple growing in the wearables space.