“During its earnings call yesterday, Apple CEO Tim Cook said that the company’s wearables revenue — from the Apple Watch, Beats headphones, and wireless AirPods — rose 50% during the quarter. We still don’t know the total size of the business, but Cook compared the segment to the size of a standalone Fortune 300 company. (No. 300 on the 2017 Fortune 500 list was Alcoa with total annual revenue of $9.3 billion, so that’s a good guess at Apple’s current annual wearable revenue.)
Of course, that’s still a rounding error for Apple, which is expected to generate total sales of $262 billion this year. But there’s one pure play whose future is all but reliant on wearables: Fitbit.
The fitness tracking pioneer is in the middle of a transformation. As demand has dropped for its legacy fitness trackers, the company has sought to transform itself into a smartwatch maker. While it hasn’t been a smooth ride, there are some positive signs of late.
Fitbit reported its first-quarter results this afternoon and said smartwatches would be 50% of revenue by the second half of the year. Shares were still down 5.5% in after-hours trading, thanks to a weak forecast for the current quarter.
I spoke to Fitbit CEO James Park and CFO William Zerella shortly before the company held its conference call with investors tonight. For what it’s worth, both Park and Zerella sounded optimistic about the smartwatch transformation, especially the recent launch of the company’s Versa watch. Here are some highlights from my conversation with them.”