AirPods Pro supply problems couldn’t stop Apple’s surging wearables business

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Finally! AirPods Pro bring active noise cancellation.
They were tough to get at Christmas, but they still made Apple a lot of money.
Photo: Apple

When Apple reported an all-time record for quarterly revenue Tuesday, it got a big boost from one of its smallest products: the AirPods Pro.

Despite severe supply constraints, the new wireless earbuds helped Apple sell $10 billion worth of wearables and accessories in the holiday quarter, a 37% jump from a year ago, the company reported. Revenue for the wearables sector grew 17% to a new all-time record of $12.7 billion.

AirPods Pro sales were ‘phenomenal’

“Demand for AirPods continues to be phenomenal,” said Apple CEO Tim Cook during the company’s earnings call Tuesday. Apple also enjoyed “extremely strong double-digit” growth in China for its wearables business, which includes the Apple Watch and AirPods, according to Cook.

Apple no longer reports individual unit sales figures. However, Bernstein analyst Toni Sacconaghi estimated on Monday that AirPods generated about $6 billion in revenue in 2019, almost double that of the original AirPods sales numbers in 2018.

“As a result of Apple disclosing virtually nothing about their financials, we believe AirPods are probably the most under-appreciated part of Apple’s business today,” Sacconaghi said.

AirPods Pro supply problems easing slowly

The rosy numbers came despite supply shortages for the $249 AirPods Pro since their release last October. The AirPods Pro supply constraints persist, with shipping dates currently extending out a month or so. In fact, Cook said he simply does not know when supply will catch up for demand for the popular earbuds.

“On AirPods Pro, I don’t have a estimate for that for you,” Cook said. “I just can’t predict when at this point. We seem to be fairly substantially off there. And we’re working very hard to put in additional capacity.”

Cook didn’t reveal numbers of new customers for the AirPods Pro, but did say the noise-cancelling wireless earbuds “did very well.”

Analyst Daniel Ives from Wedbush Securities said last quarter that the total number of AirPods shipped in 2019 could hit as 65 million. That number could grow to 90 million in 2020, he said.

In November, Apple said AirPods Pro sales were going so well that the company was doubling production. That jump wasn’t enough to meet demand. Shortages at Christmas — both in-store and online — became an unwelcome reality for some shoppers. In late November, Apple’s website showed that a set of AirPods Pro wouldn’t ship until after the holidays.