Apple’s wearable business is so hot that it now generates more revenue than Netflix

Apple’s wearable products category that includes devices like the Apple Watch and super-popular AirPods hasn’t gotten the credit it deserves for how important this collection of products has become to Apple’s bottom line. That’s according to a new analyst reports that estimates that the revenue from the iPhone maker’s wearables category will, believe it or not, eclipse that of the iPad and Mac by the end of next year.

Analyst Neil Cybart’s forecast is built around modeling that shows Apple’s wearables category now at a $16 billion annual run rate in terms of revenue. To put the category’s performance into some context, Netflix’s revenue fell just short of that number (a little more than $15 billion) for 2018. Not only that; Cybart also believes Apple’s wearables revenue is growing at a 55% to 60% rate.

Even more impressive, this is despite how much emphasis Apple is putting on its burgeoning “services” category (did you catch the teaser trailer for the new Apple TV+ series The Morning Show that dropped on Monday?), with revenue from the wearables category almost eclipsing that from services in the third quarter. “Consensus was not expecting this to occur,” Cybart notes, “as Services was positioned as Apple’s growth engine. It is clear that consensus spent too much time on the Services highway and ended up missing the exit for wearables.

“In taking a closer look at wearables revenue growth, it becomes evident that Apple is benefiting from both higher ASPs for Apple Watch and AirPods as well as continued strong unit sales growth. For AirPods, unit sales growth is nothing short of spectacular at 80%.”

New @AboveAvalon article:

Apple Deserves More Credit for Wearableshttps://t.co/f18EVYcbfP

Apple is the undisputed leader in wearables, and they are pulling away from the competition.

— Neil Cybart (@neilcybart) August 9, 2019

It’s important to point out that Apple’s wearables category, oddly, also wraps in accessories like the HomePod — though, again, the vast majority of sales are attributable to the Watch and AirPods. Moreover, Cybart estimates that Apple is on the road to soon enjoying an installed base of 100 million users for each of those two products. The company is already more than halfway there with the Watch, he notes, and AirPods are getting there fast despite only being on the market a comparably shorter amount of time.

Setting aside new wearable devices that Apple adds to this category in the future, improvements to existing hits like the Watch will no doubt only solidify its head here, reports like this show. Imagine, for example, what an Apple Watch that’s completely free of needing an iPhone, something that is most assuredly coming, would do to sales of the Watch in the future.