Counterpoint’s latest report reveals that Apple Watch’s attach rate has reached 30% in the United States in H1, 2022. It is the highest attach rate for the smartwatch for any half year since its launch in 2015.
The report accredits Apple Watch’s success to its evolution from a fashion accessory to comprehensive health, fitness, and wellness tracking device which offers innovative tech like fall detection, ECG, blood oxygen saturation detection, wrist temperature sensing, sleep tracking, activity metrics, and many others. Furthermore, Apple Watch’s support for cellular connectivity allows users to carry out daily tasks directly from the wrist without having to carry around their iPhones.
At its launch in 2015, Apple Watch had a limited range of functions. It allowed users to pay, message and call, but the advantages of having a smartwatch in addition to a smartphone were not entirely obvious. But over time, new features were added… Apple Watch’s role as a helpful health and fitness tracking tool, as well as a small, lightweight alternative to a smartphone for daily tasks, came to be.
As the iPhone market saturates, Apple Watch is likely to be the next growth driver
In Q2, 2022, Apple Watch dominated the smartwatch market by capturing the largest 29.3% share in spite of macroeconomic deterrents like inflation, and geopolitical issues. Recently, Piper Sandler’s 44th semi-annual Taking Stock With Teens revealed that 31% of teens own an Apple Watch.
The research firm predicts that the increase in Apple Watch’s popularity is likely to put it at the center of the tech company’s hardware strategy as its top-line revenue growth as the iPhone market saturates. Apple’s smartwatch has the potential of generating $70 billion in annual revenue at least.
Globally, Apple Watch shipments were just 18% of iPhone shipments in 2021. If Apple views every iPhone user as a potential Apple Watch user, then the annual revenue opportunity for Apple Watch would be nearly $70 billion, or nearly 550% higher than the current estimated annual Apple Watch revenues.
The introduction of premium models like the new Apple Watch Ultra is going to drive up the average selling price (ASP) and integration with Apple services could lead to a much higher revenue opportunity.
In Q3 2022, services generated 23.6% of Apple’s total revenue, up from just over 10% in Q3 2015. People love listening to music on the run and while exercising. A connected cellular Apple Watch will play a pivotal role in the growth of service revenues, mainly through subscriptions of Apple Music, Apple Care and Apple Podcasts. There is more room for growth if Apple decides to design more services to fit the form factor.