Jean-Louis Gassée: iWatch won’t sell in numbers, dollar volume, or profit comparable to iPhone or iPad

“The most ambitious rumors project 50 million iWatches sold in the first 12 months. I think that’s an unrealistic estimate, but if a $300 iWatch can sell at these numbers, that’s $15B for the year,” Jean-Louis Gassée writes for Monday Note. “This seems like a huge number until you compare it to a conservative estimate for the iPhone: 50 million iPhones at $650 generates $32B per quarter.”

“Perhaps the the iWatch will establish itself as The Smartwatch Done Right. But even if it succeeds in this category-defining role, it won’t have the power and flexibility or the huge number of apps of a true trouser pocket computer,” Gassée writes. “As a result, the iWatch will be part of the supporting cast, not a first order product like the iPhone.”

“There’s nothing wrong with that — it might help make high-margin iPhones even more attractive — but it won’t sell in numbers, dollar volume, or profit comparable to the iPhone or iPad,” Gassée writes. “The iWatch, if and when announced, might be The Next Big Thing – for the few weeks of a gargantuan media feast. But it won’t redefine an industry the way PCs, smartphones and tablets did.”

Much more in the full article here.

Related articles:
TheStreet’s Rocco Pendola: Apple’s iWatch will fail – June 23, 2014
Analyst: Apple to sell ‘iWatch’ to at least 10% of existing iPhone users next year – June 13, 2014
UBS sees Apple selling 21 million $300 ‘iWatch’ units in first year – June 9, 2014

34 Comments

    1. To be major business, iWatches have to be absolutely ground-breaking in more ways that having a lot of sensors. Otherwise ten or even twenty sensors would not make me wearing watches; I have let it go about decade ago.

      The market of people who like wearing watches still exists and has value, but it will not be enough for this category to be anything close in value to iPhone, iPad or even Mac.

      To be bigger than that, iWatches have to break through current markets and “force” people like myself wearing. I doubt it is possible, but lets wait and see.

      1. I read, probably on this website, that Apple has applied for an FDA approval….I just googled diabetes. as of 2011, 20.9Million americans…Cleveland clinic is lining up. Mayo Clinic is already on board….

        Need I say more?

    2. Me, too. Especially the line where he says “There’s nothing wrong with that.”

      I don’t think it will sell as well as the iPhone. And that’s okay. It can/will still be a huge success.

      1. So, we know nothing about the iWatch yet. Let us try this. A dozen old retired people always get together and eat everyday. One day, one of the 12 had an iWatch call 911 and now remains alive in the ER that day do to Apple’s iOS devices. Do you really think that Apple will not sell 11 iPhones and 11 iWatches to the retired group within 24 hours? How about every student in Common Core that is being monitored during testing and the school day?

        Really, Apple will not sell iWatches. “Think Different.”

        1. Just imagine the numbers of people over 50 years old who are inflicted with one thing or another and need help after they get woozie or pass out.

          Vision the iWatch sending the critical readings and sending the precice location of the watch to the paramedics on call.

          Wonder how many of his/her friends will buy an iWatch.

  1. People forget or dont understand that Rolex is a good wearable business? If a version of the iWatch costs thousands of dollars it may be even a bigger business than the iphone.

    1. Rolex, a premium global brand since the early 1900s, ranked 57 in Forbes most power global brands, has annual revenue of approximately $7.4 billion. Compare that to $32 Billion per quarter.

      Rolex isn’t a wearable tech brand, so the comparison is way off. Its watches are made of gold, diamonds, and other jewelry/status type materials. Apple has no experience at all producing or selling in this environment nor does any executive in the company have any experience or have they expressed any interest in doing so.

      We don’t know what the iWatch will be, but we have some idea of the technology that’s available today, and based on the most ambitious use of technology and pricing with a 30% margin, it seems unlikely that there’s a market here that is anything more than a subset of the iPhone.

      I’ve been saying this for a long time now, and totally agree with Jean-Louis Gassée. $15 Billion sounds about right, and it’s totally a great number.

      In fact, Apple could end up making more money from the boost to the ecosystem as a result of the iWatch than from the iWatch itself.

    1. Not sure if that would be a good thing. No expert but the wonderful promise of that OS seemed to evaporate once it actually had to do all the things that its competitors already did. Not sure if that was due to inevitability or mostly lack of development and cost of implementation but seen similar statements about all sorts of promising technology based on unrepresentative examples that could never make the grade in the real world.

      1. I remember installing BeOS. It was much better than MacOS and in some ways better than NeXTSTEP, but it lacked developers, and thus software.

        When Jobs sold NeXT (or reversed acquired), he sold it on the ability to offer a smooth transition, which ended up being extremely well executed. I believe Jean-Louis Gassée wanted a clean break from MacOS.

        It’s often hard to look back and ask what if, without getting an answer because it never happened, but in this case we’re looking at something that has a history of failure. That is BeOS was already on the market. It failed. Apple buying it wasn’t going to results in its success, but rather Apple’s failure. We’ve seen this happen other times as well… Palm failed with WebOS, but then sold to HP only to have HP fail again with WebOS because it was already rejected in the market.

  2. When will people stop comparing new products volume to existing products volume? Have they not learnt their lesson yet? Idiots were saying when iPhone came out that 10M units in 1 year won’t dent Apple’s earnings compared to Mac and iPod, and iPhone will cannibalize iPod etc etc. Any new product has small vol at fist but 3 years out u will see the major effect,Wall St sees that and prices it in by giving a higher PE to the stock anticipating this new revenue growth.

  3. It depends how Apple intends to market such a device, which Apple hasn’t officially announced yet. A plausible scenario would be a device that focuses on health monitoring, which would be useful to an aging cohort of Baby Boomers, who are the most likely group with the necessary discretionary funds to go out and buy it.

  4. I think the importance of an iWatch could be less about the money they make from it directly, and more about it serving as another way of keeping people buying iPhones. If people are actively using an iWatch, and it is an accessory for an iPhone then those people are that much less likely to change to something else. Money will be made from it no doubt, but it’s just another anchoring point for the entire apple ecosystem.

    1. Right another apple product to keep u entrenched in the Apple ecosystem which like Apple TV iPad Mac iPhone will work flawlessly with each other and you will wonder how you were able to live without it before. Apple knows what it’s doing. But hell it would be nice if the doomsayers actually waited till Apple announced the product before giving a timetable for its demise.

  5. I still think it will be more like the Neuton than the iPhone. The subject of jokes you may recall. Somewhat like Googleglass is derided. iCal me as you down vote me.

  6. Nobody outside of Apple knows whether this project actually exists, when it might go into production, what sort of features it might have and what the selling price might be, but that doesn’t stop people from pretending that they know how many of these devices Apple will be able to sell.

    If the iWatch does come to fruition, I would make three predictions. One is that the experts will rubbish it the day it’s launched. The second is that it will be significantly different from what those same experts are currently predicting it will be like and the third is that Apple will sell as many as they can manufacture.

    1. I tend to agree with you, but I would add that the FINANCIAL and INDUSTRY-type “experts” will rubbish it, say it won’t sell or has no future, etc. while the product reviewers will drool all over it and the public will be demanding them faster than Apple can make them.

    1. Read what he wrote. He’s not suggesting it will be a failure, just pointing out that it’s likely to be less than the iPhone or iPad (and may boost sales of those devices).

  7. It’s what I’ve been arguing for a while — so long as these devices demand intelligence from another device they are accessories, and less intrinsically useful.
    However, see this as a launch of an iPhone controlled ecosystem — beats headphones, iWatch, third party devices, and things could be more interesting.
    In future (if not already, and never say never) it seems most likely these devices will carry their own connected intelligence — they won’t be accessories, but alternatives, giving some unique functions, but sacrificing some smartphone functions (no big display, for example).
    I argue this sort of thing in here http://blogs.computerworld.com/smartphones/23378/ces-2014-when-smartwatch-dumb
    However, I do still feel it is possible Apple will hit us with a true smartwatch — one with its own built in intelligence and good battery life, which can also pair with an iPhone (for example) if you like; but does not need to in order to deliver at least some useful functions — though those functions would necessarily have to be truly useful, like phone calls or music streaming, I guess.

    1. Who’s they??? Who exactly said that when the iPod was released that it wouldn’t sell as much as the iPhone or iPad?

      Read the article. Jean-Louis Gassée isn’t bashing the iWatch or claiming it won’t be a success, but rather pointing out that the iWatch, whatever it’s likely to be, will sell less units and with less revenue than either the iPhone or the iPad.

      I’ve been saying that all along as well. Inherently the iWatch will be a subset of the success of the iPhone and iPad, but that’s still a success, and the boost to the ecosystem may even be more valuable than the revenue from the iWatch itself.

  8. The iPhone began life dependent on the Mac (or PC). Over time it left home to become a staggering success. Great things begin small.

    Can’t wait for the biometric bracelet.

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