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When Watch surpassed iPod

The last time Apple reported iPod unit and revenues was for the third quarter of 2014. Thereafter the product segment called “Other Products” was used to include what was formerly the iPod segment and the “Accessories” segment. Exactly two quarters later Apple began to sell the Apple Watch. Apple Watch was not broken out as a separate product segment and remained a part of Other Products along with iPod touch, Beats, Apple TV, and Apple-branded and third-party accessories. Soon the HomePod will also join the Other products.

The combined iPod, Accessories and “Other” product sales are shown in the following graph.[1]

Note that an attempt is made to estimate the contribution of Apple Watch to the mix. The method is simple: if you can estimate the non-Watch sales trajectory then the Watch is the difference between Other total and this trajectory.

If we discount the iPod, the non-Watch revenues come down to Apple TV and Beats, mainly.  Note that the data shows the contribution of Beats (Q4 2010) but it’s hard to parse specifically the growth of Beats. Since the Watch launched we also saw the introduction of AirPods and new Apple TVs, both of which probably contributed to some growth to “Other excluding Watch.”

We can take a stab at the first 6 quarters of Watch by projecting Other with some nominal growth. Thereafter Watch can be modeled using growth assumptions. Apple stated that growth was above 50% during the past three quarters. There are a few quarters where we must make guesses but overall the picture that emerges, shown below, is fairly robust. Note that I’ve included estimates for the fourth quarter of 2017 assuming continuing 50% growth. This is driven primarily by the launch of the LTE-enabled Series 3.

The result is a cumulative sales value of $14.3 billion and a volume of 40 million units (based on average pricing assumptions).

 

But what most catches the eye is the transition from iPod to Watch. Watch entered nearly at the same time as iPod bowed out. Its contribution to sales seems to mirror the iPod as well. The interesting question then becomes if the Watch will eventually match and indeed exceed the revenues from iPod.

I’d say the better question is _when_ Watch will overtake iPod. From a revenue point of view, I believe next year’s fourth quarter will see the Watch generating higher revenues than the highest quarter for the iPod.[2]

In terms of yearly unit sales it may take longer. The biggest year for iPod units was 2008 when about 55 million iPods shipped. Watch is now running at about 16million. If it could sustain 30% growth then it would take until 2022. 40% growth would mean 2021 and 50% 2020.

It’s not easy to predict growth but my bet remains that Watch will get there eventually becoming the third most popular Apple product. Perhaps even second.

Overtaking the iPod is quite an achievement considering that the iPod was once synonymous with Apple itself. Although Watch may overcome iPod, Apple may never be known as the Watch company. That’s perhaps for the best. I’ve noted before that Apple was once seen as the Apple II company, became the Mac company then the iPod company. Now of course it is thought of as the iPhone company though it’s no more that than it ever was any of the other things.

 

 

Notes:
  1. Two quarters include estimated iPod revenues: Q4 ’14 and Q1 ’15. The iPod contribution is estimated with a simple extrapolation using the previous four quarters’ average rate of decline []
  2. That was in Q4 2007 when iPod managed $4 billion. []
  • In an year more revenue than iPod: the greatest flop of all times

    • So true. And a year from now the tech and financial press will still be cooking up reasons why Apple’s days are numbered.

    • jbelkin

      EXACTLY. Most seem to presume the applewatch is already a $6 BILLION dollar division. You’d be hard pressed to name ANOTHER product that has sold $6 BILLION worth of product in 2 years after launch. Companies are delirious if they launch a new line that does $1B after5 years – DELIRIOUS. Apple has launched about 10 MULTI-BILLION dollar lines in the past 15 years … Google? They have spent $20 BILLION so far to have a 0.07% of the smartphone market.

  • Space Gorilla

    “Now of course it is thought of as the iPhone company though it’s no more that than it ever was any of the other things.”

    A key point indeed, which most people completely miss.

  • berult

    Once the triangle ‘ears, wrists, eyes’ is finally assembled and fully committed to the elliptic geometry of an iPhoned heart, all three sides of the equilateral triangle might symbiotically grow the…’hear hear’ millennium equivalent of…balls, balls of Socrates’ yore. And die… And dye humanity’s mantle the vernacular hues of proactive humanism.

    Until that glorious moment of testicular alchemy, metrics, on an obsequious geometric progression, with haywire diligence, hold sway…still…over a mythical destination; augmented realism, a state of being that comes naturally to so few of us, shall sprout its commons after all… berult.

    • klahanas

      Are you the caveman from the Geico commercials?

      Alchemy is BS. Considering that, testicular alchemy must have it’s origins in attempting to turn testicles into gold, in which case, it’s been done.

      https://static.rogerebert.com/uploads/movie/movie_poster/austin-powers-in-goldmember-2002/large_wdH7LaF3RQ2NFjKrrzndntBdNC7.jpg

      As a consequence of such sorcery, and your sacrifice to The Realm, your testicles will now belong to the magical device at the heart of your envision triangulation… 😉

    • Sacto_Joe

      Thanks for posting, Beirult! And pay no attention to the mental dwarf squatting under the bridge….

      • klahanas


  • Sacto_Joe

    Thanks for the story, Horace! BTW, do you have an estimate for the amounts the AirPod is adding to the Other catagory?

  • Stephen W. Carson

    Your RSS feed hasn’t updated since 2013. Please fix!

    • HansMaulwurfXIV

      • Stephen W. Carson

        Ha!
        I stopped using RSS for a while but I’m back on it now. It is still a pretty great way to keep up with things.

    • sigaba

      You can reach his webmaster at 73450.2066@compuserve.net

    • Stephen W. Carson

      I’m sorry. This was not an issue with the RSS feed here. I’m using WebBlur as my RSS reader and it looks like they automatically switched me to the Feed Burner cache of this feed… Which is indeed several years out of date.

      Once I forced WebBlur to use http://www.asymco.com/feed/ then I am seeing current material.

      Boo on Feed Burner! (Might want to see if you can get that fixed at Feed Burner!)

  • Tony Cincera

    iPod revenue disappears?!

    Such a surprise especially when you abandon the product and don’t update it. Apple has a tendency to introduce a line, then let it languish and claim that it’s sales are diminishing. There’s a 30-40% bump in sales when it updates a product; and yes I would know. Let it go 24-36 months and guess what, it’s sales decrease. Given they don’t do what most direct marketers do(use co-op data, remarketing, etc) product updates is really the few customer influences Apple controls; another is store openings and oh yeah, store updates.
    Even sheetmetal changes on the same automobile style bumps sales. Even ingredient changes in basic foodstuffs increase interest and purchases.

    Stange, no.

    • Kizedek

      What does all that have to do with the article?

      The iPod wound down and is mostly sold to kids now because the iPhone was created in 2007. Peak iPod came soon after (2009-2010 according to graph). It’s not about what happened after peak iPod.

      The point is, the iPod was considered a successful product, for years. Peak was, what, eight years in. But already, barely two years in, the Watch, considered by many not to be a success, is hitting the revenue that iPod had at its peak, not what iPod has earned more recently as it gets submerged by the iPhone and iPad.

      Most analysts are not seeing how significant the Watch is. Strange, yes.