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Wearables, Home & AccessoriesNarrow moat

Apple (AAPL) — moat facet

The fastest-growing line of the decade has now shrunk four years running, and each new iPhone owner buys less of it than the owners before.

Wearables, Home and Accessories is the line Apple built after the iPhone, and for four years it has been the one going backwards. It sold $35.6 billion in fiscal 2026, 7.4% of the company, down from a peak of $41.2 billion in fiscal 202212.

Wearables, Home and Accessories, fiscal years ($B)24.5FY1930.6FY2038.4FY2141.2FY2239.8FY2337.0FY2435.7FY2535.6FY26Apple results exhibits; four consecutive declines, 14% below the FY2022 peak
Four red years in a row. The category Apple needs to carry its next platform stopped growing before the platform arrived.

The 10-K describes what is inside: wearables, meaning smartwatches, wireless headphones and spatial computers, so the Apple Watch, the AirPods family and the Vision Pro; home products such as Apple TV and HomePod; and accessories3. Apple reports none of them separately, and the split on the chart page is an estimate. The line is also the most seasonal Apple has: the December 2025 quarter brought in $11.5 billion, against $7.9 billion in each of the two quarters after it45, most likely because watches and earbuds are bought as gifts.

The history is short. Apple unveiled the Watch in September 20146; until fiscal 2019 the category was reported as "Other Products" alongside the iPod and Apple TV, and it was $10.1 billion in fiscal 2015, $11.1 billion in fiscal 2016, $12.9 billion in fiscal 2017 and $17.4 billion in fiscal 2018 as originally reported78. Then came the fastest growth of any Apple line since fiscal 2016: 36% in fiscal 2018 and 41% in fiscal 2019, which the 10-K attributes to higher sales of AirPods and the Apple Watch9, and 25% in each of fiscal 2020 and fiscal 202110. By fiscal 2022 the line was larger than the Mac11.

It makes money the way the iPhone does, one device at a time, with one difference that matters: a Watch needs an iPhone, and the AirPods are built to pair with one, so the line sells mostly to Apple's existing customers. That is a limit on it as a stand-alone business and a strength for the moat, which is why Multi-Device Households treats these devices as part of the lock-in. Apple said on its June-quarter call that more than half of the quarter's Apple Watch buyers were new to the product12, so the line is still recruiting inside a base that is already very large.

Apple gives no margin for the line. It sits inside the products gross margin of 39.3% for fiscal 202613; whether AirPods and accessories earn more or less than that average is a question the filings do not answer.

The decline had plain causes. Sales fell 3% in fiscal 2023, 7% in fiscal 2024 and 4% in fiscal 2025, each time on lower sales of wearables and accessories1415, and then a further 0.3% in fiscal 202626. Nothing replaced the AirPods and Watch surge. The Vision Pro, still $3,499 and about 650 grams after its M5 refresh16, is a niche product, and Apple shelved the cheaper headset it had in development to concentrate on glasses17. From fiscal 2019 to fiscal 2026 the line still compounded at about 5.5% a year, but from its fiscal 2022 peak it has lost 14%18. Measured against the base it sells into, the fall is sharper: about $14 of wearables, home products and accessories per active device, against about $23 in fiscal 202219. The base kept growing and the line did not, which means each new iPhone owner is buying less of it than the owners who came before.

Two quarters looked like a turn and were not. Sales rose 5.0% in March and 6.5% in June, to $7.9 billion both times, on higher sales of accessories and wearables2021, after a fall in the December quarter22 — and then September fell 7.9%, to $8.3 billion, against a prior year that had the Watch SE 3 and AirPods Pro 3 in it27. September's event added AirPods 5, the Apple Watch Series 12 and the Watch Ultra 423, and FDA-cleared hypertension notifications give the Watch a reason to be replaced that has nothing to do with fashion24. Apple expects the feature to notify more than a million people with undiagnosed high blood pressure in its first year25, and every one of them is wearing a device that has to be charged, updated and eventually replaced. The glasses Apple plans for 2027 would be booked here as well; they are discussed under The Future Bets.

The full-year total decided the verdict, and it went against the line: $35,577 million against $35,686 million, a fourth consecutive decline, lost by a whisker in the best year Apple has ever had28. The category Apple needs to carry its next platform stopped growing before the platform arrived. December is what would overturn that — this line earns about a third of its year in the holidays, so growth there, with AirPods 5 and two new Watches on sale, is the only thing standing between a pause and a plateau.

Moat trajectory: Narrowing

Four consecutive annual declines now, and the September quarter fell 7.9% against a prior year carrying the Watch SE 3 and AirPods Pro 3. Two quarters of growth in the spring looked like a turn and were not. Measured against the base it sells into the fall is sharper still: about $14 of wearables and accessories per active device, against $23 in fiscal 2022. The line Apple needs to carry its next platform is shrinking while every other part of the company compounds.

The number that tests this moat
Moat Explorer calc
Wearables revenue per active device
About $14 in FY2026, from about $23 in FY2022

The line sells into Apple's own base, so the fair measure is what each device in that base buys. It has fallen by nearly two-fifths while the base grew, which says each new iPhone owner buys less of this category than the owners before. A figure that stops falling would be the first evidence the health features are pulling replacements.

How it's calculated: FY2026 Wearables net sales of $35,577M over the stated installed base of more than 2.5 billion active devices.
Source: Moat Explorer calculation from Apple's Q4 FY2026 results exhibit ↗
References
  1. ReportedWearables, Home and Accessories net sales of $35,577M in FY2026.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  2. Moat Explorer calcThe line was 7.4% of Apple's FY2026 revenue, down from a $41.2 billion peak in FY2022.
    Moat Explorer calculation from Apple's Q4 FY2026 results exhibit (growth rates, category and segment shares, products and Services gross margins, gross-profit shares and compound growth rates are all derived from the reported dollar figures) — FY2026 · publ. 3 November 2026 · source ↗
    Method: Shares and margins are the reported dollar lines divided into one another.
  3. ReportedThe 10-K describes what is inside: wearables, meaning smartwatches, wireless headphones and spatial computers, so the Apple Watch, the AirPods family and the Vision Pro; home products such as Apple TV and HomePod; and accessories.
    Apple Form 10-K, FY2025, Item 1 - the iPhone, Mac, iPad and Wearables, Home and Accessories lines (wearables include smartwatches, wireless headphones and spatial computers); Services: advertising incl. third-party licensing arrangements, AppleCare, cloud services, digital content incl. the App Store and subscription services, payment services; reportable segments are geographic; direct and indirect channels 40% and 60% of net sales — FY2025 · publ. 31 October 2025 · source ↗
  4. ReportedThe line is also the most seasonal Apple has: the December 2025 quarter brought in $11.5 billion, against $7.9 billion in each of the two quarters after it, most likely because watches and earbuds are bought as gifts.
    Apple Form 10-Q, quarter ended 27 December 2025 - iPhone $85,269M; Mac $8,386M (from $8,987M) on lower laptop and desktop sales; iPad $8,595M on iPad and iPad Pro; Wearables $11,493M (from $11,747M); Services $30,013M — Q1 FY2026 · publ. 30 January 2026 · source ↗
  5. ReportedThe line is also the most seasonal Apple has: the December 2025 quarter brought in $11.5 billion, against $7.9 billion in each of the two quarters after it, most likely because watches and earbuds are bought as gifts.
    Apple Form 10-Q, quarter ended 28 March 2026 - iPhone $56,994M (from $46,841M) on Pro models; Mac $8,399M on laptops; iPad $6,914M on the iPad; Wearables $7,901M (from $7,522M); Services $30,976M (from $26,645M) — Q2 FY2026 · publ. 1 May 2026 · source ↗
  6. ReportedApple unveiled the Watch in September 2014; until fiscal 2019 the category was reported as "Other Products" alongside the iPod and Apple TV, and it was $10.1 billion in fiscal 2015, $11.1 billion in fiscal 2016, $12.9 billion in fiscal 2017 and $17.4 billion in fiscal 2018 as originally reported.
    Apple press release, 'Apple Unveils Apple Watch' (9 September 2014) — September 2014 · publ. 9 September 2014 · source ↗
  7. ReportedApple unveiled the Watch in September 2014; until fiscal 2019 the category was reported as "Other Products" alongside the iPod and Apple TV, and it was $10.1 billion in fiscal 2015, $11.1 billion in fiscal 2016, $12.9 billion in fiscal 2017 and $17.4 billion in fiscal 2018 as originally reported.
    Apple Form 10-K, FY2015 - net sales and unit sales by product FY2013-FY2015 (iPhone $155,041M; iPad $23,227M on 54,856K units, and $31,980M on 71,033K in 2013; Mac $25,471M, $21,483M on 16,341K in 2013; Services $19,909M; Other Products $10,067M) — FY2013-FY2015 · publ. 28 October 2015 · source ↗
  8. ReportedApple unveiled the Watch in September 2014; until fiscal 2019 the category was reported as "Other Products" alongside the iPod and Apple TV, and it was $10.1 billion in fiscal 2015, $11.1 billion in fiscal 2016, $12.9 billion in fiscal 2017 and $17.4 billion in fiscal 2018 as originally reported.
    Apple Form 10-K, FY2018 - net sales and unit sales by product FY2016-FY2018 as originally reported (iPhone $166,699M on 217,722K units; iPad $18,805M on 43,535K; Mac $25,484M on 18,209K; Other Products $17,417M); iPad ASPs lower on a different mix of iPads — FY2016-FY2018 · publ. 5 November 2018 · source ↗
  9. ReportedThen came the fastest growth of any Apple line since fiscal 2016: 36% in fiscal 2018 and 41% in fiscal 2019, which the 10-K attributes to higher sales of AirPods and the Apple Watch, and 25% in each of fiscal 2020 and fiscal 2021.
    Apple Form 10-K, FY2019 - the recast category table (Wearables, Home and Accessories +41% and +36% on AirPods and Apple Watch; iPhone -14% on lower unit sales; Services +16%); gross margin by products and services, services 55.0% (2017) and 63.7% (2019) — FY2017-FY2019 · publ. 31 October 2019 · source ↗
  10. ReportedThen came the fastest growth of any Apple line since fiscal 2016: 36% in fiscal 2018 and 41% in fiscal 2019, which the 10-K attributes to higher sales of AirPods and the Apple Watch, and 25% in each of fiscal 2020 and fiscal 2021.
    Apple Form 10-K, FY2021 - net sales by category FY2019-FY2021 (iPhone +39% on new models launched in the first and fourth quarters; Mac +23%; iPad $31,862M, +34% on iPad Air and iPad Pro; Wearables +25%; Services +27%); services gross margin 69.7% — FY2019-FY2021 · publ. 29 October 2021 · source ↗
  11. ReportedBy fiscal 2022 the line was larger than the Mac.
    Apple Form 10-K, FY2022 - net sales by category FY2020-FY2022 (Mac $40,177M; Wearables, Home and Accessories $41,241M in 2022; iPad -8% on the iPad Pro) — FY2020-FY2022 · publ. 28 October 2022 · source ↗
  12. ReportedApple said on its June-quarter call that more than half of the quarter's Apple Watch buyers were new to the product, so the line is still recruiting inside a base that is already very large.
    MacRumors live coverage of Apple's Q3 FY2026 call (30 July 2026) — installed base above 2.5 billion; product margin 40.1% with a 2.5-point tariff-refund impact; September-quarter guidance: revenue growth of 9-11%, gross margin 47-48% with about 1% benefit from tariff refunds; Apple introduced a neural engine in 2017 — Q3 FY2026 call · publ. 30 July 2026 · source ↗
  13. Moat Explorer calcA products gross margin of 39.3% for FY2026.
    Moat Explorer calculation from Apple's Q4 FY2026 results exhibit (growth rates, category and segment shares, products and Services gross margins, gross-profit shares and compound growth rates are all derived from the reported dollar figures) — FY2026 · publ. 3 November 2026 · source ↗
    Method: Shares and margins are the reported dollar lines divided into one another.
  14. ReportedSales fell 3% in fiscal 2023, 7% in fiscal 2024 and 4% in fiscal 2025, each time on lower sales of wearables and accessories.
    Apple Form 10-K, FY2023 - iPhone -2% ($4.9B) on non-Pro models; Mac -27% ($10.8B) on laptops; iPad -3% on iPad mini and Air; Wearables, Home and Accessories -3% ($1.4B); Services +9% ($7.1B) across all lines of business — FY2023 · publ. 3 November 2023 · source ↗
  15. ReportedSales fell 3% in fiscal 2023, 7% in fiscal 2024 and 4% in fiscal 2025, each time on lower sales of wearables and accessories.
    Apple Form 10-K, FY2025, Item 7 - net sales by category 2023-2025 (iPhone $209,586M / $201,183M / $200,583M; Mac $33,708M / $29,984M / $29,357M; iPad $28,023M / $26,694M / $28,300M; Wearables, Home and Accessories $35,686M / $37,005M / $39,845M; Services $109,158M / $96,169M / $85,200M) and the drivers of each change; products and services gross margin 36.8% and 75.4%; services cost of sales $26,844M — FY2023-FY2025 · publ. 31 October 2025 · source ↗
  16. ReportedThe Vision Pro, still $3,499 and about 650 grams after its M5 refresh, is a niche product, and Apple shelved the cheaper headset it had in development to concentrate on glasses.
    Apple Vision Pro (M5) review — October 2025 refresh: M5 chip, 120Hz, price unchanged at $3,499, ~650g — Oct 2025 · publ. Oct 2025 · source ↗
  17. ReportedThe Vision Pro, still $3,499 and about 650 grams after its M5 refresh, is a niche product, and Apple shelved the cheaper headset it had in development to concentrate on glasses.
    Reported Apple smart-glasses roadmap — cheaper headset shelved; iPhone-paired glasses targeted ~2027, display-equipped model ~2028 — Reported 2025–2026 · publ. 2025 · source ↗
  18. Moat Explorer calcThe line compounded at about 5.5% a year from FY2019 to FY2026 and is 14% below its FY2022 peak.
    Moat Explorer calculation from Apple's Q4 FY2026 results exhibit (growth rates, category and segment shares, products and Services gross margins, gross-profit shares and compound growth rates are all derived from the reported dollar figures) — FY2026 · publ. 3 November 2026 · source ↗
    Method: Compound annual growth from the FY2019 recast base to FY2026, i.e. (end/start)^(1/7)-1.
  19. Moat Explorer calcAbout $14 of Wearables revenue per active device, against about $23 in FY2022.
    Moat Explorer calculation from Apple's Q4 FY2026 results exhibit (growth rates, category and segment shares, products and Services gross margins, gross-profit shares and compound growth rates are all derived from the reported dollar figures) — FY2026 · publ. 3 November 2026 · source ↗
    Method: FY2026 Wearables net sales of $35,577M divided by the stated installed base of more than 2.5 billion active devices.
  20. ReportedSales rose 5.0% in the March quarter and 6.5% in the June quarter, to $7.9 billion both times, on higher sales of accessories and wearables, after another fall in the December quarter.
    Apple Form 10-Q, quarter ended 28 March 2026 - iPhone $56,994M (from $46,841M) on Pro models; Mac $8,399M on laptops; iPad $6,914M on the iPad; Wearables $7,901M (from $7,522M); Services $30,976M (from $26,645M) — Q2 FY2026 · publ. 1 May 2026 · source ↗
  21. ReportedSales rose 5.0% in the March quarter and 6.5% in the June quarter, to $7.9 billion both times, on higher sales of accessories and wearables, after another fall in the December quarter.
    Apple Form 10-Q, quarter ended 27 June 2026 - iPhone $54,252M (+22%); Mac $10,352M (+29%); iPad $6,191M (-6%) on iPad mini and Air; Wearables $7,883M (+6%); Services $30,739M (+12%) on advertising and cloud services; nine months: iPhone $196,515M, Mac $27,137M, iPad $21,700M, Wearables $27,277M, Services $91,728M; services gross margin 75.6%; deferred revenue $14.9B, 64% within a year — Q3 FY2026 · publ. 31 July 2026 · source ↗
  22. ReportedSales rose 5.0% in the March quarter and 6.5% in the June quarter, to $7.9 billion both times, on higher sales of accessories and wearables, after another fall in the December quarter.
    Apple Form 10-Q, quarter ended 27 December 2025 - iPhone $85,269M; Mac $8,386M (from $8,987M) on lower laptop and desktop sales; iPad $8,595M on iPad and iPad Pro; Wearables $11,493M (from $11,747M); Services $30,013M — Q1 FY2026 · publ. 30 January 2026 · source ↗
  23. ReportedSeptember's event added AirPods 5, the Apple Watch Series 12 and the Watch Ultra 4, and FDA-cleared hypertension notifications give the Watch a reason to be replaced that has nothing to do with fashion.
    CNN Business live coverage of Apple's 9 September 2026 event — CEO John Ternus, who took over from Tim Cook earlier in the month, revealed the foldable iPhone Duo, starting at $1,999 and topping out at $3,199; pre-orders from October 16, availability from October 23; iPhone 18 Pro from $1,199 and Pro Max from $1,299 against $1,099 and $1,199 for the iPhone 17 Pro models; older iPhones up $100 (iPhone 17 $899 from $799, 17e $699 from $599); a new leasing plan, Apple Upgrade — 9 September 2026 · publ. 9 September 2026 · source ↗
  24. ReportedSeptember's event added AirPods 5, the Apple Watch Series 12 and the Watch Ultra 4, and FDA-cleared hypertension notifications give the Watch a reason to be replaced that has nothing to do with fashion.
    Apple Support — hypertension notifications on Apple Watch: FDA-cleared, watchOS 26, Series 9 and later / Ultra 2 and later, available in 150+ countries and regions; screening feature, not a diagnostic — watchOS 26 (2025) · publ. 2025 · source ↗
  25. ReportedApple expects the feature to notify more than a million people with undiagnosed high blood pressure in its first year, and every one of them is wearing a device that has to be charged, updated and eventually replaced.
    Apple Newsroom — Apple Watch Series 11 debut (Sept 2025): hypertension notifications expected to notify over 1 million people with undiagnosed hypertension in the first year — Sept 2025 · publ. Sept 2025 · source ↗
  26. ReportedWearables, Home and Accessories fell 0.3% in FY2026, to $35,577M from $35,686M.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
  27. ReportedWearables fell 7.9% in the September quarter, to $8,300M, against a prior year that included the Watch SE 3 and AirPods Pro 3.
    Apple Q4 FY2026 earnings call — Ternus: memory pricing "unprecedented"; Khan: manufacturing purchase obligations up $33 billion from the June to the September quarter, December constraints on Mac and iPad "primarily driven by memory"; Parekh: December revenue growth 7-10% and "the best quarter for revenue in the history of the company", Services growth 8-9% with "headwinds, primarily driven by third-party licensing and foreign exchange", gross margin 45-46% on higher memory costs and the Siri AI ramp, Siri AI cloud costs recognised through Services cost of sales; installed base over 2.5 billion active devices; paid subscriptions over 1.5 billion; Services gross margin 76.0%; App Store "performance was similar to the prior year" with "headwinds in mobile gaming" — Quarter ended 26 September 2026 · publ. 2 November 2026 · source ↗
  28. ReportedFY2026 Wearables net sales of $35,577M against $35,686M in FY2025 — a fourth consecutive annual decline.
    Apple Inc., Form 8-K Exhibit 99.1 — Q4 FY2026 results: revenue $114,477M (+12%), net income $30,711M, diluted EPS $2.10; twelve months revenue $478,834M, net income $132,175M, diluted EPS $8.98; net sales by category iPhone $254,098M, Services $123,301M, Wearables/Home/Accessories $35,577M, Mac $37,929M, iPad $27,929M; by segment Americas $198,083M, Europe $127,604M, Greater China $82,378M, Japan $30,908M, Rest of Asia Pacific $39,861M; R&D $45,765M; inventories $14,541M vs $5,718M; intangibles $20,278M vs $11,093M; repurchases $86,390M; capex $9,041M; D&A $13,423M — Q4 and FY2026 (quarter and year ended 26 September 2026) · publ. 2 November 2026 · source ↗
Sources
Generated November 3, 2026