Strong preorder demand for Apple Watch could signal 5M sales in June quarter, RBC says

Posted:
in Apple Watch edited April 2015
With some new Apple Watch orders scheduled to ship as late as July, Apple already has another smash-hit product in its lineup, RBC Capital Markets believes.




Analyst Amit Daryanani of RBC issued a note to investors on Monday, indicating that strong demand for the Apple Watch after preorders began on Monday will translate to blockbuster sales. His forecast calls for Apple to sell between 3 million and 5 million units in the June quarter --?numbers he said Monday are "reasonable" expectations with the immediate sell-out of preorders.

For the first year of Apple Watch sales, Daryanani sees Apple moving between 15 million and 20 million units. While he expects those numbers to only add 5 percent to the company's bottom line, he did note that sales at that level would be "very impressive" for a first-generation product.

Daryanani's estimates call for an average selling price of $550 for the Apple Watch.

The analyst also noted that lead times for new orders haven't changed much since preorders for the Watch began last Friday. To him, that suggests that Apple will be able to ramp up its supply over the coming weeks and months in line with recent orders.

Analysts have been quick to weigh in on Monday after Apple declined to announce first-weekend preorder numbers for the device. Earlier, Timothy Arcuri of Cowen and Company revealed comments from retail employees who indicated that nearly all try-on appointments for the Apple Watch have resulted in preorders.

Arcuri is more bullish on the Apple Watch than Daryanani, with a forecast calling for sales of 31 million units in the first 12 months.

While Apple didn't officially announced preorder figures, Slice Intelligence reported data suggesting orders may have reached 1 million in the first 24 hours of availability. It was said that buyers were most interested in the space gray aluminum Apple Watch Sport.
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Comments

  • Reply 1 of 76
    calicali Posts: 3,494member
    Later this year get ready for the long list of "Apple Watch killers".
  • Reply 2 of 76
    nick29nick29 Posts: 111member
    Apple would love to sell 31 million in 12 months, even 5 million in the quarter seems optimistic. I bet there is some supply manipulation going on to juice their marketing efforts, but I think 5-7 million units sold by the end of the year is realistic. Price aside, committing to wearing a device that promises to be far more invasive than a phone in your pocket is a tough pill to swallow. Wonder how many people will buy the watch, wear it for a time, and decide its just overkill.
  • Reply 3 of 76
    As an Apple shareholder, I'm glad to see the strong release quarter sales. But the real issue is how good a product the Apple Watch turns out to be in the wild, not least because it will determine how well the product sells in outlying quarters.

    It's reasonable to expect issues as the watches are rolled out en masse. Apple nearly always has had a shadow product that preceded any successful product (Newton for iPhone, for example). If they truly got this right the first time, that would be unprecedented in their history.
  • Reply 4 of 76
    drewys808drewys808 Posts: 546member



    I think most don't realize that profit from selling aWatches is actually not as important as Apple continuing to grow its mindshare, brand and ecosystem.

     

    Because along with customer satisfaction numbers (which are great), Apple secures itself as THE platform to buy into, live with...and die with.

     

    To die with?...Apple has in its hands the hardware/software platform of the century. Many will literally die with an Apple device in our pocket, around our wrist or on our finger...Apple Ring anyone?

  • Reply 5 of 76
    MacProMacPro Posts: 19,379member
    cali wrote: »
    Later this year get ready for the long list of "Apple Watch killers".

    Samsung are adapting a fridge as we speak.
  • Reply 6 of 76
    jfc1138jfc1138 Posts: 3,090member
    Quote:

    Originally Posted by Nick29 View Post



    Apple would love to sell 31 million in 12 months, even 5 million in the quarter seems optimistic. I bet there is some supply manipulation going on to juice their marketing efforts, but I think 5-7 million units sold by the end of the year is realistic. Price aside, committing to wearing a device that promises to be far more invasive than a phone in your pocket is a tough pill to swallow. Wonder how many people will buy the watch, wear it for a time, and decide its just overkill.



    Any degree of "Invasive" is completely a user choice, exactly like a smartphone's notifications.

  • Reply 7 of 76
    Quote:
    Originally Posted by Nick29 View Post



    I bet there is some supply manipulation going on to juice their marketing efforts...

    Oh please. Just quit it with this tired, old, discredited BS.

  • Reply 8 of 76

    I stick by 6m for May + June (with a week of April), mostly because of supply constraints (real ones) as discussed here: http://q10a1.blogspot.com/2015/03/apple-watch-sales-expectations.html

  • Reply 9 of 76
    SpamSandwichSpamSandwich Posts: 33,408member

    I'm willing to wait for some kind of supporting information from Apple. At some point, they'll want to provide developers with evidence to spur them to do more work to drive their sales.

  • Reply 10 of 76

    As much as Apple eclipses most other companies in regards to managing supply chain, they do seem to have hiccups with new product launches.  It's understandable when the forecast is blown away by demand, but much like the iPhone 6 and 6+, the Watch not having enough quantity to even keep up with the first few days of pre-orders, tells me Apple is either having issues with yield or they forecast really low given the flops that most other smartwatches have experienced.

  • Reply 11 of 76
    jmgregory1 wrote: »
    As much as Apple eclipses most other companies in regards to managing supply chain, they do seem to have hiccups with new product launches.  It's understandable when the forecast is blown away by demand, but much like the iPhone 6 and 6+, the Watch not having enough quantity to even keep up with the first few days of pre-orders, tells me Apple is either having issues with yield or they forecast really low given the flops that most other smartwatches have experienced.

    Product launches present a difficult problem: lots of demand in a short time.

    To combat this... Apple would pretty much have to open a 2nd factory just for the launch quarter.

    Yes... it would ensure enough supply for the initial launch... but then they'd be stuck with an extra factory for the rest of the year when demand is lower.

    You're right... Apple and Tim Cook are masters of supply chain. So it they found a solution... they'd probably be doing it.
  • Reply 12 of 76
    wizard69wizard69 Posts: 13,377member
    nick29 wrote: »
    Apple would love to sell 31 million in 12 months, even 5 million in the quarter seems optimistic. I bet there is some supply manipulation going on to juice their marketing efforts, but I think 5-7 million units sold by the end of the year is realistic. Price aside, committing to wearing a device that promises to be far more invasive than a phone in your pocket is a tough pill to swallow. Wonder how many people will buy the watch, wear it for a time, and decide its just overkill.

    Early adopters are not a measure of a devices success. I would imagine that success would be demonstrated by the end of the year.

    The only reason I could see for buying an Apple watch is if it could handle blood sugar monitoring. In general I hate wearing anything on my wrists. As such I won't be a customer anytime soon.
  • Reply 13 of 76
    Quote:

    Originally Posted by Michael Scrip View Post





    Product launches present a difficult problem: lots of demand in a short time.



    To combat this... Apple would pretty much have to open a 2nd factory just for the launch quarter.



    Yes... it would ensure enough supply for the initial launch... but then they'd be stuck with an extra factory for the rest of the year when demand is lower.



    You're right... Apple and Tim Cook are masters of supply chain. So it they found a solution... they'd probably be doing it.



    Instead of opening more factories to ensure launch product availability, Apple could delay launch dates until more product is on-hand.  It's a challenge for sure - It's always better to have less quantity than demand (to a point), compared to too much product and not enough demand.

  • Reply 14 of 76
    wizard69wizard69 Posts: 13,377member
    jmgregory1 wrote: »
    As much as Apple eclipses most other companies in regards to managing supply chain, they do seem to have hiccups with new product launches.  It's understandable when the forecast is blown away by demand, but much like the iPhone 6 and 6+, the Watch not having enough quantity to even keep up with the first few days of pre-orders, tells me Apple is either having issues with yield or they forecast really low given the flops that most other smartwatches have experienced.

    The big problem is that initial demand is hard to estimate, especially with many different models available. Further you need to build your production capacity for long term demand estimates. Some have estimated that Apple sold a million of these watches already, that is a pretty impressive launch for a watch.
  • Reply 15 of 76
    iaeeniaeen Posts: 588member
    jmgregory1 wrote: »

    Instead of opening more factories to ensure launch product availability, Apple could delay launch dates until more product is on-hand.  It's a challenge for sure - It's always better to have less quantity than demand (to a point), compared to too much product and not enough demand.

    Why should they spend money on warehouses to store extra supply all while making the consumer wait even longer? Further, what if the product flops and they are stuck with warehouses full of product nobody wants?
  • Reply 16 of 76
    jmgregory1 wrote: »
    Instead of opening more factories to ensure launch product availability, Apple could delay launch dates until more product is on-hand.  It's a challenge for sure - It's always better to have less quantity than demand (to a point), compared to too much product and not enough demand.

    Do you honestly think Apple hasn't thought of that already? :D
  • Reply 17 of 76
    rp2011rp2011 Posts: 159member
    It's safe to say Pebble is officially over. $300 for the Pebble Steel when you can get a Sport for $350? Anyone would be nuts to go for the Pebble in that option, even if you own an Android Phone.

    And it only gets worse. Next year, the price goes down on the previous generation which would still be far better than a Pebble could ever hope to be and it continues to snowball.

    Android is in far better shape as the technology developed for Apple's watch and Android wear will be available to everyone. I love the idea of a spunky start up, as Apple itself was, but it's dead. Dead as a doorknob.
  • Reply 18 of 76
    cm477cm477 Posts: 95member



    I'd like to see this analyst's financial model and see how he comes up with a $550 average price. I honestly expect most of the sales to be Sport watches (80-90%, maybe), and the rest the premium models. I think the Edition model is for pure hype, but I guess enough could be sold to bring up the average sales price. 

  • Reply 19 of 76
    jm6032jm6032 Posts: 147member
    Quote:

    Originally Posted by wizard69 View Post





    ...if it could handle blood sugar monitoring...

    A bit off topic, but your comment led me to google "non-invasive blood sugar testing." This, as probably expected, seems to have a lot of activity and some promising technologies. I would not be surprised to see this type of testing appearing in wearables. I would definitely be very interested.

  • Reply 20 of 76
    jfc1138jfc1138 Posts: 3,090member
    Quote:

    Originally Posted by Michael Scrip View Post





    Do you honestly think Apple hasn't thought of that already? image



    Cook is thought to have already remarked on just that in a discussion that hit on the size of the Campus 2 auditorium space: that suitably large facilities have such long scheduling lead times Apple get's forced into committing prematurely which, when they control the space, doesn't apply and they can schedule and announce at their time frame not a venue's.

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