Overall, Apple beat analyst expectations with $1.67 per share, versus the anticipated $1.57 per share. Revenue was $45.4 billion, when Wall Street forecast $44.89 billion.
Shares were quickly up 5 percent in initial after-hours trading on the good news, but one often overlooked category is “other products,” where they group in the performance of things like Apple Watches, Apple TVs, Beats electronics, iPods and Apple-branded accessories.
This category brought in $2.74 billion in revenue and is up 23 percent since the same period last year. One product that is contributing to the annual revenue growth is AirPods, the wireless earbuds that Apple released in December of last year. (I personally think they look a tad dorky, but everyone I know who has them loves the sound quality.)
Since all AirPod revenue is new and the Apple Watch is up more than 50 percent since last year, that means most of the other products in the category likely saw much slower growth or even some declines since the weighted average is lower, at a positive 23 percent. But without knowing approximately what revenue percentage Apple Watch accounts for, we don’t know for sure.
One analyst, Ben Bajarin from Creative Strategies, estimates that Apple Watch sold two to three million devices.
It’s not clear why sales are up so significantly. Some people have suggested that compatibility with AirPods have helped sales. It also probably helps that fitness trackers like Fitbit are struggling and Jawbone is going out of business. Also, since the release dates were staggered, a September 2016 watch is more current than an April 2015 watch was in the same period last year.
“Other products” is down 5 percent since quarter two of this year, but there tends to be a seasonality to retail products. Also it’s been a while since the September 2016 release of the Apple Watch second generation product and Apple TV hasn’t had a new product since October 2015, so a quarterly decline is not surprising.
Then there’s Beats Electronics, which the company spent $3 billion to buy in 2014. The Dr. Dre-branded headphones have a cult following, but there’s also a lot of competition.
As for iPods, most Apple fans own an iPhone by now, so it’s hard to see why people would buy a separate product with overlapping capabilities.
Let’s hope Apple gives us a more detailed breakdown of all the “other products.”