“On average, analysts expect Apple will sell 22 million watches this year and 33 million next year, according to the 17 reports I have cataloged,” Aaron Pressman writes for Yahoo Finance. “With an expected average selling price of $450, most analysts are predicting that sales of the low-end model will dominate.”
“With those assumptions, Apple could generate almost $10 billion of new revenue this year and $17 billion next year. That’s a huge amount of sales for most companies, but Apple had revenue of $200 billion last year generating net income of $44 billion,” Pressman writes. “This week, the Wall Street Journal reported that Apple had ordered manufacturers to build 5 million to 6 million watches ahead of the April debut.”
“If consumers go along with Apple’s reported watch mix, and one in six opt for the gold model, the average selling price will be much higher. Assuming $500 for the midrange model and $5,000 for the gold watch, the average selling price comes out to almost $1,200,” Pressman writes. “Start modeling those assumptions and pretty soon Carl Icahn’s Apple target of $216 looks a lot more reasonable. New revenue could total $25 billion this year and $40 billion in 2016.”
Read more in the full article here.
[Thanks to MacDailyNews Readers “Fred Mertz” and “Dan K.” for the heads up.]
Related article:
Apple Watch Edition will cost at least $5,000, probably much more – February 19, 2015
The headline could just as easily have read:
“18-karat gold Apple watch could propel the absurdity of the consumer mentality to new heights”
My thoughts, as well. This is just ludicrous for an item that will be obsolete in a year. There is no question who is being targeted, and that is very un-Apple. A watch for the rest of us? Give me a break. :/
Perhaps the innards “pop out” and can simply be replaced with new? Besides, there are many people who would appreciate the technology but who are NOT keen on wearing tech that LOOKS like tech!
I’m leaning towards the why aspect of an Apple Watch, especially after reading that the health aspects were turning out to be not up to par. Watches are so meh nowadays. A watch.. really? Whereas a heath monitoring (blood pressure, pulse, heart rate, etc) device with data automatically sent to your health provider would be welcome to me. I reiterate to me. I, in my “busy” lifestyle do not sit down and take my blood pressure daily although I am interested in that data. I know my doctor would love to have it.
A “watch” sounds like a solution in search of a need. Apple doesn’t do that. At least they haven’t in the past.
Their assumptions and logic seem flawed. Even if the initial Apple Watch sales follow that 3-2-1 ratio, there is no reason to believe that demand will continue to follow that mix in the months or years that follow.
There are too many unknowns to make valid predictions of unit sales and revenues. Except at the low end, even the unit prices are speculation at this point. But that does not stop them from trying…
Has anyone predicted what the upgrade cycle might look like on an Apple Watch? You know…like…a new iPhone model is expected annually. What might an Apple Watch cycle look like? It seems that that should calculate in as well. More granularly – while there are predictions the low-end model will dominate in sales (and maybe refresh more often), how will the high-end look at refresh? Few Rolex owners update with each new model. How will you upgrade? Let’s say some better sensor technology arrives after a year, my 18k gold is still good – can I trade in? Can the case be kept and the guts be swapped? It presents some interesting considerations. It should all become apparent…one day I guess.
@Wirehead
Some analysts are saying that the cost of the gold itself in a solid gold Edition watch points to prices closer to $10,000. I’ve been thinking (as you have) that if Apple promised to sell periodic hardware upgrades for just the internals for such a watch it could make such high prices more palatable to those high end customers.
Most luxury watches are not perceived as becoming obsolete over time, but a 4 year old iPhone is, and a 4 year old apple watch might be as well. IMO A promise of available internal upgrades could definitely help deal with that issue.
The gold watch is the one variant that does not make much sense to me yet. Gold mechanical watches sell because mechanical watches do not go obsolete. Mechanical watches made a hundred years ago work in about the same way as modern ones do and if well, maintained a mechanical watch can last forever. Watch companies are willing to service and repair even the earliest watches they made. Gold watches are often kept for generations and often can be sold for decent prices decades after purchase.
That isn’t quite the case with consumer electronics. A piece of technology that is state of the art today is somewhat outdated a year from now and in a couple more years is hopelessly obsolete. In maybe 5-6 years, companies replacement parts will no longer be available. Why would anyone want to spend thousands of dollars for a watch that is going to become a paperweight in less than a decade?
I hope Apple announces some kind of trade in or upgrade program for the gold watches. Without something like that in place, I don’t see too many people buying one of the gold watches.
– HCE
Exactly what I have been thinking for quite some time.
Granted some people will still spend the money considering how much they will spend on cell phones or computers that go obsolete but there is a different element with the watch I agree.
I don’t plan on blowing $5,000 on a watch that will go obsolete in 2-3 years. I don’t care what the fans think – this thing is not a Rolex.
Who keeps saying the 18K is going to sell for $5000?
Gruber thinks they’ll be $10,000 minimum. I don’t care, because I’d never wear such a watch in my wallow.
Will it blend?