Apple Watch Sales Projections Fail To Impress - InformationWeek

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7/2/2015
01:06 PM
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Apple Watch Sales Projections Fail To Impress

The Apple Watch made a big splash in the media, but some financial and tech analysts aren't convinced consumers and enterprises are buying the hype.

Apple Watch: My In-Store Demo
Apple Watch: My In-Store Demo
(Click image for larger view and slideshow.)

While the launch of the Apple Watch may have been surrounded by an avalanche of media interest, the hype hasn't translated into robust sales, according to a research note from Pacific Crest senior research analyst Andy Hargreaves.

The analyst cut his sales forecast for the fiscal year for the device to 10.5 million from 11 million, according to a report in USA Today that reviewed the research note.

Hargreaves also warned soft follow-up sales would impact sales in fiscal 2016 -- this prompted him to reduce his forecast to 21 million for that period, down from a previous estimate of 24 million.

"Anecdotal evidence suggests Apple Watch demand is slowing quickly," Hargreaves' note cautioned. "This dovetails with recent supply checks, which suggested a reduction in component order volume."

In May, UBS analyst Steven Milunovich issued a similar warning that was widely picked up by the media, calling Apple Watch sales tepid and dropping his yearly sales forecast for the device by 10 million, down to 31 million from 41 million -- a number still significantly higher than the Pacific Crest estimate.

Other analyst firms appear more optimistic on the Watch.

A May note from analytics firm Global Equities Research authored by managing director Trip Chowdhry and analyst Tej Singh predicted the Apple Watch would be the most addictive device ever created for both consumer and enterprise.

"Our research continues to indicate that Apple can now easily sell between 40 million and 42 million Apple Watches in CY2015," the note stated.

Apple has so far remained silent as to how many of its smartwatches have been bought, but with a price tag starting at $350, ranging up to $17,000, the device may be out of the general consumer's price range.

Reviews of the device so far have been mixed, praising the smartwatch's aesthetic and build quality, though usability frustrations and limitations have not gone unnoticed. (It's hard to press the right app on such a small screen, and battery life leaves something to be desired.)

[Looking for an Apple Watch alternative? Here are some of our favorites.]

Last month, Pebble announced the release dates for its latest entry into the smartwatch market, the Time, which will be sold exclusively through Best Buy retail stores.

The Pebble release is the latest in a long string of smartwatch releases by consumer electronics companies like LG, Huawei, HP, Samsung, and even traditional watchmakers like TAG Heuer, which is targeting the same luxury market as Apple.

Total smartwatch ownership in America is forecast to reach 9% of the adult population by 2016, according to an April report from IT research specialist NPD Group.

The second most successful platform for wearable devices is Apple archrival Android. Around 720,000 Android Wear devices shipped in 2014 out of a total of 4.6 million smart wearable bands, according to a February report from Canalys.

Nathan Eddy is a freelance writer for InformationWeek. He has written for Popular Mechanics, Sales & Marketing Management Magazine, FierceMarkets, and CRN, among others. In 2012 he made his first documentary film, The Absent Column. He currently lives in Berlin. View Full Bio

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LarryO848
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LarryO848,
User Rank: Apprentice
7/2/2015 | 1:44:16 PM
Apple Watch Sales
Wow those are pretty bad. What are the other companies watches doing, sales wise?
Gary_EL
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Gary_EL,
User Rank: Ninja
7/2/2015 | 11:30:25 PM
A digital watch conundrum
The watch is quite expensive, so it's most likely target users will be people over 40. Most people over 40 become nearsighted, so they will not be able to read their watches without reading glasses, which they would have to reach into their pocket to get. If they have to reach into their pockets, why not just pull out their smartphones instead? The only people who will be able to read their watches without glasses probably won't be able to afford the watches in the first place.
Whoopty
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Whoopty,
User Rank: Ninja
7/3/2015 | 5:01:32 AM
Re: A digital watch conundrum
This is a fair point, though most Apple hardware is on the expensive end of the spectrum and it's drawn a big, young crowd in recent years. I wonder if it's more to do with the relatively few legitimate uses for a smartwatch at the moment - for the price. There are many activity trackers that do just as much and they won't be so outdated in a year's time since they aren't trying to do everything.

I'm not sure. I hope this is consumers being smart, but that's rarely the case. 
melgross
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melgross,
User Rank: Ninja
7/3/2015 | 10:26:35 AM
Re: A digital watch conundrum
We need to compare this to the Swiss watch industry. Over 29 million Swiss watches were sold last year, at an average price of $732. Most of those watches are nothing great to write home about. The really expensive models are a just a fraction of those sales. With Apple's watches starting at less than half that price, there really is no reason why they shouldn't do well. I don't believe the doom and gloom.
Li Tan
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Li Tan,
User Rank: Ninja
7/3/2015 | 10:29:48 AM
Re: A digital watch conundrum
It's hard to say how many people are willing to pay for iWatch, except real Apple funs. I am expecting the new generation of iWatch. To me the current iWatch has some shortcomings (battery life, limited functionality, etc.) that many people may not have strong desire to purchase it.
moarsauce123
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moarsauce123,
User Rank: Ninja
7/3/2015 | 3:55:37 PM
Re: A digital watch conundrum
The iWatch might be cheaper than the average Swiss watch price, but that is for the iWatch only which without an iPhone is even dumber than a door knob. Add the iPhone plus the expensive data plans and the iWatch comes way up higher in cost than a Swiss watch. Plus, with a Swiss watch you pay once and enjoy a decent piece of timekeeping for the rest of your life. With an iWatch you have to keep paying every month and buy a new watch within a matter of years.

Besides that, and that does not only apply to the iWatch, but all smart watches: the smart watches are the solution to a problem that does not exist! Anything a smart watch can do your smart phone can do already and typically much better. So all the smart watch does is keeping your from pulling the smart phone out of the pocket. Rather expensive for that negligible amount of comfort which only applies to a few use cases anyway.

The iWatch is an overpriced toy for those who need such a gadget to bolster their ego. It is an expensive set of bragging rights and even more useless than a sports car or a Tesla.
danielcawrey
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danielcawrey,
User Rank: Ninja
7/3/2015 | 8:55:19 PM
Re: Apple Watch Sales
Long-term, I expect smartwatches to do well. 

But they need an ecosystem to form around them that make them truly useful. Early adopters will fuel that, but I don't see real purpose yet. Maybe if they can replace the smartphone, then there a value proposition. 
JerryW955
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JerryW955,
User Rank: Apprentice
7/4/2015 | 12:42:24 AM
Re: A digital watch conundrum
Apple watch is notthing like luxury watches like the swiss. Swiss is a well known brand in the watch industry. Apple is a no name in the watch industry. The apple watch was a joke since the beginning, people have been laughing at the price point and how useless it is. It's low battery, bulky, few years down the line you will need a replacement, price, and eventually the watch will die. 
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