Charles Sizemore: The Apple Watch will flop

“Rumors broke last week that the high-end version of the Apple Watch—the Edition—would have an 18-karat-gold case and could cost $4,000 or more. Some rumors have the sales price closer to $10,000, or about on par with an entry-level Rolex,” Charles Sizemore writes of Sizemore Insights. “This immediately begs the question: Who in their right mind is going to pay Rolex prices for a kitschy piece of wearable tech that will be obsolete in two years?

“Seriously. I get the appeal of a high-end watch with a real Swiss movement. It’s classy and old-fashioned…and it’s something a man can pass on to his son or grandson one day. There is something infinitely appealing about that. But a digital watch that beeps with incoming text messages kinda lacks that timeless appeal,” Sizemore writes. “Consider the average iPhone buyer: They are the average American. Most buy a highly-subsidized phone in exchange for a long-term contract with their carrier. Is it really realistic to assume that one out of a hundred of them will spend thousands of dollars on a gold watch? I have higher hopes for the sport edition of the Apple Watch, which is expected to retail for about $350. But even here, is it realistic to expect sales of 2 million to 3 million per quarter? That would imply that 2% – 3% of all iPhone owners buy an Apple Watch every year. That’s probably doable. But it would also only add about $3 billion to Apple’s revenues in a given year. That’s nice, but hardly a game changer.”

“Here is the beauty of it: The Apple Watch doesn’t matter. If the Apple Watch is a total flop — and I believe there is a decent chance that it will be — it will be a minor bump in the road for Apple,” Sizemore writes. “Is there a trade here? Maybe. If Apple Watch sales come in lower than expected, Wall Street might dump AAPL stock in a short-sighted temper tantrum. Should that happen, use it as a buying opportunity. Apple is a dividend-raising, share repurchasing powerhouse with a bullet-proof balance sheet.””

Read more in the full article here.

MacDailyNews Take: iCal’ed.

[Thanks to MacDailyNews Reader “Bill” for the heads up.]

42 Comments

  1. I somewhat agree with the sentiments in this article in that I don’t see how it could be useful to me in terms of productivity but I also thought the same things about a lot of other Apple products which I use on a daily basis now. Tim Cook implied that it is an important productivity tool for him so I’m going to keep an open mind. I don’t plan to buy the watch for jewelry because that’s not me. I’d rather have a Gold Eagle than gold jewelry. Would I buy one? Sure. I like trying out tech gadgets and some of these aren’t out of my budget for gadgets. As long as it is reasonably useful from a work or fitness perspective. I could justify it if I could use it as a Bluetooth music player as I think that it would be more convenient than my iPod Nano.

    1. I agree with the author. I don’t want the watch, and I certainly don’t want to pay a ridonkulous “fashion tax” for it.

      The real message of Apple is value, not fashion.

      1. i just voted my comment a 5-star comment. I imagine all the other comments with 1 vote of 5-stars are similarly their authors giving themselves a 5-star rating.

        lol

  2. A watch is a very personal thing, You will keep your watch with all of your bands, When it comes time to up upgrade every 12-18 months you will go to the apple store where it will take them only about 1 min to loosen the back and remove the module which contains the processor, battery and censors and replace it with the newest and greatest.

    1. We’re talking Apple here. Apple’s modus operandi has been to make devices with limited or no ability to upgrade while simultaneously quickly driving them to obsolescence to get customers to buy the latest device.

      1. Pardon me?

        In my office – MacBook Pro 15″ six years old, works 24/7. MacBook Pro 13″ three years old ditto. iPad two years old ditto.

        SE30 4/40 c1986 still in fine working order, used as display piece with prehistoric video game.

        Macbook 145b 1992 works well, donated to museum.

      2. This time will be different, they will in essence will be selling you a new watch. You will only be keeping the case and bands and the display, at at some point the display will be updated also but that will be farther in between.

    2. If Apple planned for the Watch to be upgradable as you say, it would have touted the feature. Then everyone would clamor about why their iPhones aren’t upgradable.

      No, Apple is in the business of selling you a new product. But fear not, Apple will have a great trade-in program like it does with its iPhones now.

      Plus, I don’t think the Watch will need to be upgraded anywhere near as often as an iPhone or even iPad. That’s because the iPhone paired with the Watch does the heaving lifting, and Watch is basically a data relay display. Some information is obtained by the watch (heart rate, etc.), but the processing of that information is done by the iPhone. So you don’t need a new Watch, you can just upgrade your iPhone.

      1. Not to forget, this whole “$20,000 Watch” thing doesn’t come from Apple. It is anal-ized from thin air. The truth, and desireability will be known when the facts are from Apple.

    3. You mean like they do with iPhones, iPods, Macs,  TV’s etc? Not. Gonna. Happen.
      And don’t give me 1-stars for being in reality. I’ve owned and used Macs since Jan, 1985 and have a house literally filled with  gear.
      Nothing in Apple’s history show this to be remotely possible.

  3. There will be people who buy them, because there are people who get their iPhones covered in jewels and all sorts of other nonsense. Personally though, if I was paying that sort of money for a bit of jewellery I’d rather buy a piece that is not going to become outdated in some capacity. A traditional watch is what it it, it’s not going to become any more or less useful than it already is. That said, I suppose at that level you’re not needing to sell such huge volumes because that’s in part why you’re charging so much in the first place.
    At the lower end of pricing an Apple watch is still going to be more than a lot of people normally would spend on a watch, even people who happily buy an otherwise expensive iPhone, but the functionality will justify that, and the possibility of wanting/needing to upgrade. If you’re spending tens of thousands I would hope there is some possibility of upgrading the internals.

  4. Yea, like people do not pay thousands more for shoes, cars, clothing just to show a fashionable statement. A Rolex is another overpriced set of gears and many other watches have been passed down that where just working time pieces of the day. Not some elite name. The Apple watch will do so much more that may be required for that persons life with money burning a hole in the pocket. Who really needs a Rolex when so many other companies make precision gears? Oh, those with money. Who will buy the gold Apple watch? Those with money.

    Once again another know nothing wine sytle snob.

  5. Mostly FUD, but judging how much iPhones and iPads improve from year to year a new Apple Watch won’t be state of the art for long. That’s why I dont think we will be seeing Rolex priced versions.

  6. “…it’s something a man can pass on to his son or grandson one day”

    But once we’re all using Apple Watches, why in the world would your grandson want your old mechanical (or even worse, quartz) wristwatch?

    If you’re lucky he might keep it in a shoebox, like you might have done with your grandfather’s pocket watch… “that’s so funny grampa, your old watch had only one app!”

    1. Here’s one: “Sucks to be Charles Sizemore this week, who predicted Microsoft would crush Apple in phones and tablets. macworld.com/article/201755…”
      Or
      “Anyway, today I bring you Apple Death Knell #60, from one Charles Sizemore, writing for Forbes. For that esteemed publication, Mr. Sizemore wrote that, “In a War of Attrition, Microsoft Will Beat Apple.””

  7. My iPhone is more than capable of telling me the time. I check the time once or twice a day, less on the weekend. I don’t need a watch, gold or otherwise.

    I will take that $10,000 to $20,000 for a gold watch and buy Apple stock with it instead.

    1. You’re thinking of it like a watch. That’s as much of a mistake who dismissed the iPhone as a phone.

      And the $10K (or whatever) version is not the important one.

  8. I’ve been buying and loving apple products since I bought my PowerPC 8100. I’ve always bought apple.

    Having said that, that watch seems to me a product in search of a market. I doubt I would want one from Cook’s presentation. I’m pretty sure I won’t be getting one.

    The early adapters will jump on it, but I suspect they will shelve it after a month of use. They’ll buy it to impress their friends, but that’s about it.

  9. It depends on what his definition of a flop is. If Apple sells more than 5 million AppleWatches in a year it will still be better than all the smartwatches already out there. Besides, Apple’s definition of a flop is probably quite different from Wall Street’s definition of a flop. If Wall Street’s expectations of sales is past ten million, then I guess they will consider it a flop even if Apple’s expectations aren’t as high.

    I don’t have the slightest idea what Apple’s sales goal is, so I don’t know if AppleWatch will be a success or not. I do believe Apple is the only party to properly judge whether they’ve done well or not.

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