“Chief Executive Tim Cook has an explanation for why the company failed to report the sales of the Apple Watch — its first new product since Jobs died in 2011 — in its first quarter on the market: ‘That was not a matter of not being transparent, it was a matter of not giving our competition insight that’s a product that we’ve worked really hard on,'” Leonid Bershidsky writes for Bloomberg View.
“This excuse is transparently weak. Jobs’s Apple reported the sales of the first iPhone — 270,000 units — in its filing for the quarter ending on June 30, 2007, even though the revolutionary phone went on sale on June 29. And the iPhone had strong competition: Apple was a newcomer to the mobile handset market, and could have used the same stealth tactic, hiding iPhone sales in the ‘other’ category. But it chose to be as in-your-face as possible about the demand for its weird buttonless gadget,” Bershidsky writes. “Jobs’s Apple likewise reported unit sales for the iPad in its first quarter on the market: 3.27 million. That device created a new category, and there were strong reasons to keep competitors in the dark, but the company chose not to.”
“Cook claims that ‘the Apple Watch sell-through was higher than the comparable launch periods of the original iPhone or the original iPad.’ The first iPhone is not that hard to beat: Apple, a much smaller company eight years ago, sold 1.19 million units in the handset’s first full quarter, all in the U.S. (the international rollout, very limited by today’s standards, didn’t start until months later),” Bershidsky writes. “The assertion about the iPad is harder to believe. That device went on sale on April 3, 2010, at the start of the company’s first quarter. Apple Watch debuted at the end of April. That means it had to beat the iPad’s two-month sales. Assuming they were equal to two-thirds of the quarterly number (almost certainly wrong, but OK as a benchmark), Apple would have had to sell more than 2.18 million watches to beat the first iPad… Assuming an average price of $400 — close to the lower end of the range and probably too low given that many buyers order better-looking, more expensive bands to replace the cheap plastic ones that come standard — that’s 2.75 million units in the first two months of sales.”
MacDailyNews Take: In its first 87 days, iPad sold some 3 million units. Apple stated plainly that Watch sold more units. Seems like pretty simple math to us.
Furthermore:
• Strategy Analytics: Apple Watch takes 75% global smartwatch market share with 4 million units in Q215 – July 23, 2015
• Canalys: Apple ships 4.2 million Apple Watches in Q2 to become world’s top wearables vendor – July 21, 2015
“The problem with releasing such numbers is not that it would help the competition. All competitors combined sold just 6.8 million smartwatches in 2014. Apple has undoubtedly conquered the product category. But has it met the market’s expectations? Not by a wide margin,” Bershidsky writes. “Fortune magazine recently compiled a list of analysts’ estimates of Apple Watch sales in the quarter to June 27. On July 19, the average estimate was 4.07 million units. Only one of the analysts, Turley Muller, who runs the Financial Alchemist blog, predicted sales under 3 million units (2.85 million, still higher than my estimate based on Apple’s numbers and Cook’s statements). Deutsche Bank said 3.9 million. Apple won’t release its unit sales number because it’s afraid of falling short.”
Full article here.
MacDailyNews Take: According to two separate research firms, Apple Watch has indeed met or exceeded expectations.
Bershidsky’s theory is based on his own faulty math, but it is nonetheless, true. Just look how the market, with unrealistic expectations, greeted Apple’s record third quarter results this week.
It’s way too early, with supply issues far too deep, to judge Apple Watch on unit sales. Better for Apple to remain silent on this for now.
We’ve worn Apple Watches every waking moment now for three months. We judge the product on what it does for us. We’ll never take it off – and we’re not alone:
• Apple Watch satisfaction is unprecedented at 97%; beats original iPhone and iPad – July 20, 2015
Apple Watch has an exceedingly bright future.
Cook clearly explained in the conference call that they will not break out the numbers at this early stage to keep the competitors in the dark..
as the article states ^^ (whoops)
And yet none of these idiots feel the need to differentiate between “shipped” numbers released by companies like Samsung and “sold” numbers – actual products in actual people’s hands – that Apple releases.
He also fails to consider the utter havoc Wall Street wreaks on Apple stock prices after a quarterly financial call, seemingly with little correlation to how Apple actually performed. So why should Apple give these self-serving financial doofuses more ammunition to play games with its stock?
I think Watch is selling just fine, especially considering it is in 19 countries (I think) and has had serious supply shortages and initial production problems. We won’t see the Watch’s full effect until this holiday shopping season, and even at that I think many people (like me) are waiting for Watch 2 before pulling the trigger.
The so called analysts don’t get it that they can’t knock Apple down. The average consumer really doesn’t care what Wall Street thinks, consumers will buy what they want, for their own reasons, not what some idiot thinks they should buy.
People buy Apple products because they work and fill a need. Don’t want a watch? Then don’t buy one, but don’t run around screaming that Apple’s doomed because you don’t get it…
So let’s see, you are saying that by way of some mystical look into the future TC knew last year, before the product was release, that it would fall way short of expectations… yeah, right! if that was his thought I don’t think Apple would have invested the billions in marketing a known dud!
Cook stated, after the Watch was announced and long before the Apple Watch was released, that they would not be sharing numbers and the Watch would be part of the “other” category. So this is not a case of Apple looking at bad numbers and THEN deciding to keep quiet.
This is what Apple is really “afraid” of… IF Apple released detailed numbers so soon, the moron analysts (like this one) would use those numbers to justify ridiculously lofty expectations for future Apple Watch numbers. And when Apple does not meet expectations of the “clueless pretending to be experts,” guess what happens…? Yes, Apple is doomed, its future in question.
What Tim Cook has done is quite appropriate. He stated (without stating) a minimum number that blows away any competing product. The actual number is probably significantly higher, but without that precise number, analysts can’t make ill-informed predictions about future sales. They could, but most will not, for fear of being embarrassingly wrong.
I never quite understood how “keeping competitors in the dark” made any sense. Many of your competitors supply the components for the device. It’s not hard for Samsung to figure out how much Watch business you’re doing with or without reported numbers.
Much ado about nothing.
Plus, Apple & SJ didn’t have the hindsight they have now about how carnivorous this market is today… remember naïve SJ actually thought that owning Patent rights would protect his intellectual properties, boy! did he pay the price for that. So learning from that experience, any intelligent leader would devise & use methods to protect the interests of his company. Way to Go Tim!
Better Question:
Q: Why are ‘analysts’ OBSESSED with Watch sales numbers, particularly since Apple reports that it STILL has been unable to keep up with demand.
A: Nothing better to do. Summer filler while the ‘analysts’ tan on the beach. August Effect in July. At least that’s somewhat expected.
Me = Bored with the topic. We know full well that, despite WallNut Street analcyst dick FUD to the contrary, the Watch is a success and now dominates that market. Under these circumstances, pointed out above, of course Apple is not going to toss numbers out for analysis.
So these obsessive beach tanning analysts, with nothing better to write about, are going to have to wait until the Watch is running at full throttle in the marketplace. THEN they can rant, rave and beg for sales numbers and I’ll care.
It’s a queer thing Cook not upchucking the stuff
Uhhhhh….What competition? Thought there was nothing of the kind????
The reason Apple “hides” the numbers is to keep the competition guessing about true market size. If they see Apple actually sold 4 million watches, they will likely try to copy the watch in earnest. If they are unsure, they will hang back and just keep their toe in the water with their current poor designs and won’t throw as many resources at it. Apple can have a bit more time to consolidate its position. Tom Cook knows what he is doing.
Of course I meant Tim Cook.
Amazon has yet after years provided any numbers on most anything they sell, Kindles, that useless phone, Fire Tablets, or anything else with their name on it.. when the tech media routinely starts beating up on Amazon for this, might take them a touch more seriously.
The watch launch is different from the iPhone launch back then no one knew how rabidly the iPhone would be copied and how ineffective patent law would be to protect it. These days we know that anything that is reported to be getting favorable consumer responses will be knocked off in a heartbeat. as it currently stands, samsung and google would have to take a risk to come out with $15,000 watches, which they wouldn’t if they knew the edition was selling well
So we know, via their products, that they are far from stupid. If I wanted to buy some of my shares back then spooking Wall Street idiots would first on the plan. Stupid is as stupid does!
Maybe this author is attempting to grab our attention when the he states the “company … failed to report”. But the author full well knows that Cook did not “fail to report”. He chose not to report. And that makes this author unhappy. Too bad for him.
The author did fail to make any interesting or credible point.
Just noise.
Whatever they sold it was more than the prior quarter, or something like that, whatever!
” All competitors combined sold just 6.8 million smartwatches in 2014.”
Where did that figure come from? The number we’ve been seeing reported was under 700,000, not ten times that number. This sounds like the author of this article has a fragile grasp of statistical reporting. Another example is his reduction of the 3.2 million iPads sold in the first quarter they were on sale by artificially limiting them to the period that the Apple Watch was on sale instead of going with the actual statement that Apple Watches exceeded the iPad’s sales in their quarter. No one missed that there was no limitation on the original claim, he has added that himself so he can artificially reduce the number of Apple Watches sold.
This is my WAG after listening to a few of the supplier calls:
It appears the demand for the iPhone was greater than planned, especially in June. Some of the suppliers were scrambling to keep up with demand. The ASP’s and margins on the iPhones are higher than the watch, so maybe they decided shift some of the resources that were slated for the watch back to the iPhone.
They might of had only a couple hundred thousand or so watches available for the online launch. When the wait times increased into June and July potential customers just decided to wait until the device was available in the Apple stores. These factors probably dinged the overall June quarter sales of the Apple Watch.
The man is right, it’s about fear. Either Cook fears the numbers are low enough to cause criticism of his leadership, or its that Cook fears high number s would cause his competitors would put out serious competi and hopes to delay that response.
And Jobs, like the writer states, had a whole different philosophy…and it shows.