For a long time, selling iPhone devices has been Apple’s (NASDAQ:AAPL) staple business. However, the business has been struggling lately. Apple has looked for other dependable revenue sources. In 2014, the company made a leap into the smartwatch category in a bid to diversify its revenue sources. So far, the results have been impressive.
Apple’s smartwatch business beats Swiss competitors
Apple dominates the global smartwatch market. The company sold 30.7 million units of its Apple Watch brand in 2019, according to Strategy Analytics data. The figure marked a major milestone for Apple. The company outsold the whole Swiss watch industry. Collectively, Swiss watchmakers sold 21.1 million units in 2019—down from 24.2 million in 2018.
Apple controls about a 49.7% share of the global smartwatch market. The company is the clear leader in the market. Samsung, the closest competitor, only has a 13.4% share. Fitbit (NYSE:FIT), which agreed to sell itself to Google for $2.1 billion, controls an 11.3% share of the smartwatch market.
Wearables unit revenue rose to a record high
Apple has been very successful in the smartwatch business. Apple’s wearables unit, which houses the Apple Watch business, generated record-high sales during the holiday quarter. The sales in the unit rose 37% YoY (year-over-year) to $10 billion in the first quarter of fiscal 2020, which ended in December 2019.
In addition to Apple Watch, the wearables unit also houses earphone, home smart speaker, and accessory sales.
Apple pursuing $31 billion revenue opportunity
Smartwatch is still largely a new category in consumer devices. However, the market is growing rapidly and is already worth billions of dollars in revenue. The global smartwatch market generated $9.3 billion in revenue in 2017. Currently, the global smartwatch market is on course to top $31 billion in 2025.
Apple’s leading market share puts it in a great position to take advantage of the opportunities in the smartwatch market. A major break in the smartwatch market should contribute to Apple’s efforts to diversify its revenue sources outside the smartphone market.
Besides wearables, Apple counts on services like Apple TV+ and Apple Music to diversify its revenue sources. The company’s services revenue rose 16% YoY to a quarterly record of $12.7 billion in the first quarter. Notably, Apple is within striking distance of its target to reach about $50 billion in annual services revenue in 2020.
However, even as the smartwatch business soars, Apple faces accusations that it powers its Apple Watch devices with stolen technology and trade secrets.