With the iPhone taking a step back, the Apple Watch and AirPods pick up the slack

What you need to know

  • Apple reported a record-breaking quarter for its wearables, home and accessories category.
  • Tim Cook pointed to the wearables section as the big winner, meaning the Apple Watch and AirPods continue to grow in popularity.
  • The category jumped in revenue from $3.7 billion to $5.5 billion, picking the slack for declining iPhone figures.

Apple today held its third quarter earnings report confirming it exceeded Wall Street expectations. A big reason for that was not the performance of the iPhone, as it has for so many years, but the performance of its Wearables, Home and Accessories, with the Apple Watch and AirPods leading the charge.

Apple didn't disclose unit figures, but even Tim Cook couldn't help but gush over the performance of the wearables and services category.

When you step back and consider wearables and services together to areas where we have strategically invested in the last several years they now approach the size of a Fortune 50 company.

The $5.5 billion revenue was a new record for the wearable category, up significantly over the $3.7 million for the previous year.

That isn't too surprising as the Apple Watch and AirPods have steadily been growing in popularity. The Series 4 proved to be a smash hit while AirPods continue being the must-buy wireless earphones to own and were aided by the update that brought along wireless charging.

This is good news because iPhone sales are declining. They were down 12% from last year and continue to signal that the smartphone market truly has plateaued. No matter the engineering or innovation, people just aren't upgrading as fast as they used to which means the iPhone is gradually ceasing from being Apple's cash cow.

Luckily for Apple, the Apple Watch and AirPods are ready to take more of the load. That and the budding services category will help maneuver into a future that relies less and less on the iPhone.

Danny Zepeda