Apple Inc.’s (NASDAQ: AAPL ) Apple Watch was released in 2015 to much fanfare and analyst interaction. The smartwatch has changed the market and absolutely dominated a growing industry. The company doesn’t release sales figures, but industry experts have highlighted just how big of a lead it has for smartwatches. New reports on Apple getting into the glucose monitoring market via the Apple Watch could boost sales of the watch even further. If it can win here, it would make the Apple Watch and AAPL stock both must-owns for many.

Source: Apple

In April, the Apple Watch celebrated its two year anniversary as one of many innovative Apple products that have become must-haves for technology lovers and users who like the easy to use items from the company.

Once considered a horrible idea or a flop, the Apple Watch has actually outsold Rolex over the last 12 months. To find out just how popular the watch is and what impact it has on the finances of AAPL stock, you have to dig a little deeper.

Apple does not break out the individual performance of the Apple Watch, rather placing it in a category called Other Products with the iPod, Airpods and Beats headphones.

In AAPL’s first fiscal quarter, the company saw record sales of the iPhone, Mac and Apple Watch. Company CEO Tim Cook said, “It was also our best quarter ever for Apple Watch, both units and revenues, with holiday demand so strong that we couldn’t make enough.” Research firm Strategy Analytics estimates that AAPL shipped 5.2 million Apple Watch units and had 63% market share for smartwatches during the important holiday quarter.

What Can the Apple Watch Do for AAPL?

Apple reported second-quarter earnings last week and showed the dominance of the Apple Watch in its category again. Sales of the watch nearly doubled from the prior year and helped boost the performance of the Other Products category once again. Apple CEO Tim Cook called the performance “phenomenal growth” and said, “We couldn’t be more satisfied with it”. Interestingly enough, if AAPL’s Other Products category was its own company, sales of the Apple Watch, Airpods and Beats would be enough to make it a Fortune 500 company.

The Other Products category saw quarterly revenue of $2.9 billion. While that was a far cry from the $33.2 billion seen in sales from the iPhone in the quarter, the Other Products led the way in terms of growth. The category, which includes the Apple Watch, saw a year-over-year increase of 31%, compared to gains of 18% for Services and 14% for Mac. Revenue from iPhones grew only 1% and sales of the iPad fell 12%.

Recently, the Apple Watch gained more attention as CNBC highlighted Apple’s secret plans on making the device a potential entrant in the glucose monitoring market. AAPL has a small team of engineers developing glucose sensors over the last five years. The glucose sensor market was a long-term vision of former Apple founder Steve Jobs. The former CEO saw wearables as a possible way for the company to be involved in the life sciences market. Jobs thought wearables could eventually track oxygen levels, heart rates and blood glucose levels.

Apple entering the diabetes market shouldn’t come as a big surprise to the industry or investors. Large technology companies continue to diversify and invest where there is money to be made as technology evolves. Rival Alphabet Inc (NASDAQ: GOOG , NASDAQ: GOOGL ) is working on a diabetes project of its own, which I covered here recently.

Alphabet’s Verily Life Sciences division is working with Novartis AG (ADR) (NYSE: NVS ) on a smart lenses project that would help diabetics track their blood glucose levels. Sony Corp (ADR) (NYSE: SNE ), Samsung (OTCMKTS: SSNNF ) and other companies are also working on their own versions of smart lenses.

The diabetes market continues to be one of the largest in terms of revenue possibilities for companies. With limited treatment options, it is also one of several holy grails for the industry. In my Alphabet article, I pointed out that diabetes is one of the leading causes of deaths with more than 70,000 a year in the U.S. In 2015, around 50% of the U.S. adult population was diabetic or pre-diabetic, representing a huge market. The global diabetic care device market was worth $18.5 billion in 2015 and is seen rising to $26 billion, according to Zion Market Research.

Investors have already recognized how valuable the glucose monitoring market is. Small cap DexCom, Inc. (NASDAQ: DXCM ) has watched its stock soar 636% in the last five years. The device maker company now sports a market capitalization of $6.5 billion and is up 28% in 2017.

DexCom saw its DexCom G5 device approved as the only mobile CGM (constant glucose monitor) on the market. The device places a small sensor underneath the skin and then sends constant glucose readings to the person’s device, cutting out the need to prick a finger every hour or monitor gaps in testing due to work or school.

In the most recent first quarter, DexCom saw revenue grow 22% to $142.3 million. International sales increased 37%. The DexCom G5 is covered by Medicare and picking up coverage as a leading option for diabetic patients. Imagine if Apple can get a product similar to this to the masses with its huge distribution network, retail stores and brand appeal.

DexCom stock may not be done running either. The company has ambitious goals and a partnership with Alphabet’s Verily division. The goal is to bring a mini glucose monitor to the market and by 2021 has an even smaller disposable glucose monitor the size of a band-aid. With the company’s strong relationship with Verily, DexCom is likely more of an acquisition by Alphabet than Apple, but keep a close watch here.

Bottom Line on AAPL Stock

While analysts and investors may think The Apple Watch having relevance in the diabetes testing market may be a long ways off, it could be much closer than thought. AAPL is currently doing feasibility studies and has hired consultants to help with the regulatory path for the Apple Watch being approved as a testing device. Apple has hired biotechnology experts from other companies to help in this process.

An Apple Watch device that can monitor blood glucose levels with a good degree of accuracy will make the product a possible must own for diabetics. This should be music to the ears of owners of APPL stock. While the iPhone is the company’s bread and butter, other areas like services, Apple TV and the Apple Watch are helping the company diversify and provide a better glimpse into the future of one of the world’s most valuable companies.

As of this writing, Chris Katje did not hold a position in any of the aforementioned securities.