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WSJ: Wearables could replace the iPhone as Apple's most important revenue source

WSJ: Wearables could replace the iPhone as Apple's most important revenue source
The Apple iPhone is Apple's most important device. Think of the phone as a hub, and other Apple products and services as the spokes pushing out from the hub. And while it is hard to imagine, there will come a time when something new becomes Apple's next big thing. A report published yesterday in the Wall Street Journal suggests that wearables will eventually be the most important source of Apple's revenue.

The Apple Watch owned a leading 17% share of the wearables market last quarter according to the latest report from IDC. Over the last four quarters, the Apple Watch and wireless Apple Air Pods took in $10 billion in sales, a small crumb compared to iPhone revenue. Loup Ventures analyst Gene Munster sees Apple selling 10 million AR glasses in just its first 12 months (he now sees the product launching in 2021). He expects Apple to sell the product for $1,300 allowing it to take in $13 billion in revenue over the first year of release.

The WSJ sees a parallel between the Apple Watch and Apple's AR headset. The newspaper says that during its first couple of years, the device dubbed "Apple Glasses" will have limited functionality, and be tethered (not physically) to the iPhone. Eventually, it should become a stand-alone device, just like the cellular version of the Series 3 Apple Watch.

Note that the Journal said that wearables could become Apple's most important source of Apple's revenue. The report didn't say it would be the largest. That's because the wearable sector may not overtake iPhone sales, but it could end up driving more Apple customers to one of the company's subscription services like Apple Music and Apple Video (when it is launched). And that is important for Apple as it tries to meet its goal of hitting $50 billion in services revenue by 2021. Last year, Apple took in $30 billion in services revenue.

If the WSJ is right, wearables could be Apple's next hub with the iPhone reduced to one of the spokes.

source: WSJ

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