Apple, Inc. Has Sold More Than $5.1 Billion in Wearables Over the Past Year

By Evan Niu,

When most people think of wearable technology, they think of products like smartwatches, fitness trackers, augmented/virtual reality headsets, or perhaps esoteric things like smart bras that tweet on social media. (Yes, that last one did actually exist briefly as part of a breast cancer awareness campaign.) I think most people would not immediately consider wireless headphones to be wearable technology, although that category does technically fit.

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Apple (NASDAQ: AAPL) decidedly does consider wireless headphones to be wearable technology.

Image source: Apple.

That's what he said

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On the January earnings call, CEO Tim Cook made a peculiar comment about how Apple defines wearables: "With AirPods off to a fantastic start, a strong full first year for Apple Watch, and Beats headphones offering a great wireless experience using the Apple-designed W1 chip, we now have a rich lineup of wearable products. Their design, elegance, and ease of use make us very excited about the huge growth potential for wearables going forward."

At the time, it wasn't worth exploring too deeply, but Cook made a similar characterization of wearables on the earnings call last night, while providing some clues about wearables revenue: "In fact, when we combine Apple Watch, AirPods, and Beats headphones, our revenue from wearable products in the last four quarters was the size of a Fortune 500 company."

For reference, No. 500 on the Fortune 500 is Burlington Stores, with $5.1 billion in revenue, so we know that Apple has sold at least that amount of Apple Watches and wireless headphones (including AirPods and wireless Beats products). When asked to provide more color on wearables as a category, Cook added some more context:

It's fair to say that AirPods revenue has been negligible if we look at the past four quarters. They launched in December after delays and with severe supply constraints, and remain significantly constrained; new online orders are quoted shipping times of six weeks. BeatsX were also delayed but are now readily available, while Powerbeats3 and Solo3 were launched on time in October. All of these newer Beats products feature the same Apple-designed W1 chip that powers AirPods, and it's unclear if Apple includes legacy wireless Beats products in its wearables category.

Apple's Other Products segment, which includes AirPods and Beats, generated a total of $11.5 billion in sales on a trailing-12-month basis. That means wearables comprise at a minimum about 45% of Other Products revenue; it's probably more, but your guess is as good as mine as to what Cook's "well into" comment means. Based on Cook's statements from September, we also know that Apple Watch revenue in 2015 was somewhere between $2.5 billion and $4.5 billion.

There should be little doubt that Apple Watch represents the majority of wearables revenue, but of course investors are still left to their own devices when trying to figure out how much.

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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.