Apple Q4: The Apple Watch Dilemma—Corporate Growth Hides Lagging Wearable Revenue
Apple’s latest Q4.2025 earnings were excellent overall.
The Wearables, Home and Accessories segment told a more nuanced story, reporting a marginal revenue decline of -0.3% YoY ($9.01B vs. $9.04B year-ago, though it beat the $8.31B analyst consensus – a glimmer of positivity).
The muted narrative suggests no exceptional good news story:
- Management focused heavily on AirPods Pro 3 and AirPods 4, hinting that strong early sales of the refreshed models provided much-needed momentum to the category.
- In contrast, statements about the Apple Watch Series 11 and the Watch Ultra 3 were generic. The lack of any specific Ultra 3 mention is notable, suggesting either soft performance or a lack of new, compelling features to encourage take-up for the high-end model compared to the previous year.
Key Apple Watch Positives & The ‘Halo Effect’
Despite the revenue softness, the underlying consumer metrics for the Watch remain powerful:
- Record Installed Base: Management confirmed the Apple Watch active installed base is at an all-time high.
- High Satisfaction: This installed base is highly engaged, backed by 451 Research, citing a 96% satisfaction rating. This figure is a direct rebuttal to the mocking of non-Watch owners over battery life performance, suggesting core users value other features (health, convenience) more highly.
- New User Influx: The most significant reveal was that half of all Watch buyers in the quarter were new to the product. This fact ties into the observed Gen Z fitness market growth and similar trends reported by competing brands. The Apple Watch may successfully drive the entire smartwatch market expansion, using its lower-end models and generational upgrades to attract new users.
Conclusion: A Growth Problem, Not a Demand Problem
Despite a strong influx of new users and high satisfaction, the overall segment’s flat revenue indicates a challenge with the Average Selling Price, plus a drag in upgrade sales from existing users. The lack of enthusiasm for the high-end watch models (like the Ultra) suggests that Apple may need a more impactful hardware innovation to reignite revenue growth from its mature installed base rather than just relying on the ‘halo effect’ of new buyers.
Apple Watch is an awesome product, clearly loved by its owners. Apple needs to paint a picture or give hope about its future awesomeness. I’m not seeing it right now.
Source: Apple.com
Last Updated on 25 January 2026 by the5krunner
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tfk is the founder and author of the5krunner, an independent endurance sports technology publication. With 20 years of hands-on testing of GPS watches and wearables, and competing in triathlons at an international age-group level, tfk provides in-depth expert analysis of fitness technology for serious athletes and endurance sport competitors.
Despite being a Garmin user since my very first watch (310xt), I’d consider an Apple watch but only if it supported Android phones which probably means never.
Are you sure about that 96% Apple Watch satisfaction? Sounds implausible to me. Also, if half of purchases are to new users but revenue is down that suggests slowing device sales, poor app sales or high customer turnover, which again is difficult to square with massive customer satisfaction.
I’d imagine Apple chooses its market research company and methods carefully.
It’s a good product. I wouldn’t be surprised by high satisfaction. As you say it is VERY high.
also suggests they need to reduce the upgrade cycle ie when a person upgrades to a new model – anecdotally everyone I know with one, holds on for well over 3 years and most put up with the degraded battery.