Market Overview

New Report Reaffirms What Apple's Next Growth Engine Could Be


Apple Inc. (NASDAQ: AAPL) shares have dropped 23 percent in the last year as the iconic company continues to search for innovative avenues for growth. The Tim Cook-led operation's latest quarterly report shows that it needs to find a new revenue channel to stem investor angst.

For the quarterly period ended December 26, 2015, iPhone sales grew only 1 percent, iPad sales fell 21 percent and Mac sales declined 3 percent. Shipment numbers for all three categories missed Wall Street expectations. As the company’s smartphone and notebooks face heavy competition from Samsung and other Chinese rivals, it is performing a balancing act of sorts with its services revenue.

But, the cornerstone of the earnings report was the 62 percent growth in other products revenues that includes sales from Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.

Out of which, the Apple Watch seems to be the most notable contributor and is identified by industry experts as the next growth driver for Apple.

Report Shows Apple Watch Dominance

A recent report from Canalys also underscores this fact. Strong holiday sales helped Apple become the king of smart watches as the iPhone maker shipped two-thirds of all smart watches in 2015. The report said Apple shipped 12 million units to capture the top spot, followed by Samsung, Pebble and Huawei.

“Cashing in on holiday sales, Apple managed to rack up over five million shipments in the fourth quarter,” analyst Jason Low said in a statement. Strong holiday shipments for Fitbit Inc (NYSE: FIT), Apple and Garmin Ltd. (NASDAQ: GRMN) drove growth of over 60 percent sequentially for all wearable bands. Across the entire wearable bands segment, Fitbit led all vendors in Q4, followed by Apple and Xiaomi.

In September 2015, Apple launched a new collection of the Apple Watch in collaboration with Hermès.

This new collection is named "Apple Watch Hermès." Initially, it was available only at selected retail stores of Apple and Hermès, but it became available for purchase on Apple's website on January 22, 2016.

Health-conscious customers are expected to continue to boost the Apple Watch, which was released in April 2015. Smart watches are multi-purpose devices that serve as accessories to smart devices, are designed to be worn on the body and not carried, run an operating system and are capable of running third party computing applications.

Posted-In: Apple Watch CanalysAnalyst Color News Tech


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