Why Apple must sell one Apple Watch for every 20 iPhones or something

Apple Inc. is expected to sell a sizeable number of iPhones within the first 12 months at retail,” Louis Bedigian reports for Benzinga.

Analysts’ estimates range from 8 million to 42 million units within the first 12 months.

“‘Put it in the context of how many iPhones they’ll sell,’ former hedge fund manager Cody Willard told Benzinga. Apple sold more than 190 million units in 2014,” Bedigian reports. “‘They have to sell one Apple Watch for every 20 iPhones to hit a 10 million unit number,’ said Willard, estimating that Apple will sell roughly 200 million iPhones in 2015. ‘I think that’s an awfully high order. I don’t think one out of every 20 people buying an iPhone are buying an Apple Watch.'”

“Willard doesn’t think Apple’s silence on Apple Watch sales means that it has something to hide. ‘I don’t think Apple’s hiding something,’ said Willard,” Bedigian reports. “‘It’s about the next 18 months to two years,’ he said. ‘It’s not [about] this month or next summer. I would be cautious about… this quarter’s results on the Apple Watch.'”

Read more in the full article here.

MacDailyNews Take: Apple Watch is compatible with iPhone 5, iPhone 5c, iPhone 5s, iPhone 6 and iPhone 6 Plus. Morgan Stanley estimates there is an installed base of 315 million iPhone 5 or newer users exiting 2014 plus another 200 million iPhones in 2015 which equals an addressable market for Apple Watch of 515 million. To hit 10 million units, that’s one Apple Watch out of every 51.5 iPhones, not 20.

If Apple sticks to their initial plan, there won’t be any Apple Watch unit sales results when Q315 earnings are announced on July 21st about.

Last October, Apple stated very clearly that they would not be reporting Apple Watch sales figures:

We’ll be creating a new reporting category called other products. This will encompass everything we report in the accessories category today, including Beats headphones and speakers, Apple TV, and peripherals and accessories for iPhone, iPad, Mac, and iPod. In addition, we’ll begin to include iPod sales in the other products category, and we will also reflect sales of Apple Watch in this line item once it begins shipping in early calendar 2015. — Nancy Paxton, Apple’s Senior Director of Investor Relations, October 2014

I’m not very anxious in reporting a lot of numbers on Apple Watch… because our competitors are looking for it. – Apple CEO Tim Cook, October 2014

SEE ALSO:
Apple Watch online sales in the U.S. estimated at 3 million through first 3 months – July 13, 2015
Apple to release Q315 earnings, webcast live conference call on July 21st – June 29, 2015
Morgan Stanley: 10% of iPhone 5 and higher owners will buy an Apple Watch – November 20, 2014

12 Comments

  1. It would not be 1 in 20. Apple Watch is compatible with iPhone 5 onwards, so three years of sales = close to 550 million or so iPhones, so more than 1 in 50.

    1. i’m a fanboy yet I’m not yet all that motivated to buy an apple watch.

      i might get one just to tool around with, but it’s apple watch 2.0 or 3.0 where i’ll probably get genuinely interested.

    1. Apple never said anything about projected sales numbers. Only the know-it-all analysts started predicting absurd numbers (if based on earlier smartwatch sales). This smartwatch market has to be a “wait and see” sort of market because it’s a relatively new category.

      I’d like to know why AppleWatch is considered a flop but the Microsoft Band isn’t a flop. I have never seen one article saying the Microsoft Band was a flop and I’m sure Apple sold far more AppleWatches and made more money than Microsoft did from the Band.

  2. Where do they get these “have to sell” figures from? Does anyone actually know what size the theoretical smartwatch market will be? How can people call out numbers when they don’t know what the consumer demand for a product will be. Companies can’t just snap their fingers and create demand, can they? At least not precisely when they want it. No company has that kind of power.

    When Apple introduced the iPad, all expectations of tablet sales very low and so they weren’t even close to the higher amount Apple actually sold. So how can these people claim accuracy of how many AppleWatches expect to be sold? Their expectations could easily be too high. I simply don’t think these numbers can carry much weight in such a short time period. Some things get quick sales starts and others take time to grow sales.

    I would think it would take longer for smartwatch sales to grow if most people don’t currently wear watches. In this case it would take a longer time for smartwatch sales to grow to early predicted numbers. Far too early to yell “flop or failure.”

  3. So Apple sells 3 million watches in three months. That’s a minimum of 3M x $349 = $1.05 Billion. Swatch is one of the biggest watch companies and they do about $9.5 Billion per year.

    So Apple has sales of a minimum of a billion dollars in 3 months and their product is a failure. That makes sense to me. Right. The whole watch market worldwide is about $50 billion. So with Apple’s failure, they’ll capture 5% of the whole market in less then a year. Indeed a failure. What in the world are people thinking. There isn’t 10 companies in the whole world that sell 2 billion dollars worth of watches per year.

    In my whole life I’ve spent about $1000 on watches. $350 of that is an Apple watch. Last watch I bought before that? 2001. Failure indeed.

  4. “I’m not very anxious in reporting a lot of numbers on Apple Watch… because our competitors are looking for it.”

    … and analysts would love to distort these numbers for their own personal FUD agendas (see article above).

  5. Since Apple has told us “This will encompass everything we report in the accessories category today, including Beats headphones and speakers, Apple TV, and peripherals and accessories for iPhone, iPad, Mac, and iPod. In addition, we’ll begin to include iPod sales in the other products category, and we will also reflect sales of Apple Watch in this line item once it begins shipping in early calendar 2015.”. Anyone willing to bet some analyst will start a pie chart representing all the above making up the ‘Other’ grouping then say one category or another is failing based on the pie chart share and the reported value for the “Other” category?

  6. It is shocking to me how poorly the so-called experts understand Apple. It’s not all-about-the-Watch! It is now, has been for a long time, and always will be about the ecosystem(s) that Apple is building. the Watch is a piece of a bigger picture and clearly Apple is not stressing about watch sales. Step by step, iteration by iteration, Apple is moving closer to their vision.
    What’s not being talked about very much, even by watch owners, is how smoothly and flawlessly the watch interfaces with the phone. My watch has never broken connection, or missed important notifications, calls or texts. It just works, every time. It is amazing tech and I wouldn’t want to go a work day without it on my wrist after only six weeks. THAT should be the big conversation; the advancement in connectivity, continuity and hand off in just a couple of software generations. Apple is doing great work and is murdering Android and Samsung in particular.

  7. “Apple Inc. is expected to sell a sizeable number of iPhones within the first 12 months at retail,” Louis Bedigian reports for Benzinga.
    Analysts’ estimates range from 8 million to 42 million units within the first 12 months.”

    I had to check the article in case MDN had screwed up when quoting the article, but this analyst really did write that estimates for iPhone sales are between 8 and 42 million per year. Methinks he means Watches, but he clearly doesn’t read what he writes.

    Having been the pedant, I must say that I agree with the MDN take, because it’s important to remember that Apple Watch brings significant additional functionality ( principally Apple Pay ) to iPhones 5, 5C and 5S. I think it’s an even more compelling buy for owners of those models than it is for owners of iPhone 6.

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