“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.
• 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 has an exceedingly bright future.