Apple Watch shipments likely to remain under 15 million through Sept., insider says

Posted:
in Apple Watch edited May 2015
Faced with production issues from launch, and amidst unknown levels of consumer demand, the Apple Watch is likely to see less than 15 million units shipped through the end of September, analyst Ming-Chi Kuo predicted on Wednesday.




Kuo's revised forecast was issued in a note to investors, a copy of which was obtained by AppleInsider. In it, he said that Apple Watch shipments for fiscal year 2015 are likely to be lower than most analysts and investors expect.

Apple's fiscal year runs through the end of September, which means the 15-million forecast does not apply to holiday 2015 sales.

With reliable sources deep within Apple's supply chain, Kuo has a particularly strong track record in predicting not only Apple's future product plans, but also its shipment levels. For example, among major analysts, he had the closest estimates for Apple's blockbuster holiday quarter, predicting sales of 73 million iPhones when most forecasts were under 70 million. Apple ended up shipping 74.5 million handsets.

In Wednesday's note, Kuo said that supply issues with the Taptic Engine for Apple Watch will start to improve in late May, allowing Apple to catch up with consumer demand. But he also said demand for the new wrist-worn device has softened since it launched in late April.

"Our survey shows that most Apple Watches are scheduled to begin shipping in June, and the shipments schedule hasn't changed significantly since the start of preorders," he said. "We therefore conclude (second quarter of calendar 2015) production output is sufficient for the orders placed so far. As such, we infer that market demand for Apple Watch may be slowing down."

Kuo's research also found that over 80 percent of orders thus far have been for the larger 42-millimeter model, which implies that it has been a male-dominated customer mix for early adopters.




In his view, the first-generation Apple Watch is a device with "potential," but Kuo believes it needs improvement. He compared it to Apple's first-generation iPhone, which debuted in 2007, but saw moderate sales until the introduction of the improved second-generation iPhone 3G.

Of course, how many Apple Watches are actually shipped will remain a mystery, as Apple has said it will not report unit sales for its new product category. The company did indicate last quarter that the Watch will reduce its overall margins.

Sales could see a jolt this fall, when Kuo believes that Apple will introduce up to three additional casing materials. The analyst did not indicate what materials Apple might use, but potential options popular on the watch market include white gold, platinum, titanium, or ceramic.
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Comments

  • Reply 1 of 66
    mubailimubaili Posts: 387member
    15mm? I will take that.
  • Reply 2 of 66
    Quote:

    Originally Posted by mubaili View Post



    15mm? I will take that.

    Kinda small, though.

  • Reply 3 of 66
    Ming-Chi Kuo prediction reliability - polar opposite of Gene Munster.
  • Reply 4 of 66
    mjtomlinmjtomlin Posts: 1,821member
    Quote:

    Originally Posted by AppleInsider View Post

     

    But he also said demand for the new wrist-worn device has softened since it launched in late April.


     

    Umm, yeah that is usually the case after initial demand is met.

     

     

    Quote:


    He compared it to Apple's first-generation iPhone, which debuted in 2007, but saw moderate sales until the introduction of the improved second-generation iPhone 3G.

     



     

    Saw moderate sales? They built 6 million, they pretty much sold out before the iPhone 3G was released. Doesn't he remember the reports of the iPhone being out of stock a couple of weeks before the debut of the 3G?

  • Reply 5 of 66
    schlackschlack Posts: 686member
    ooh, ceramic would be cool
  • Reply 6 of 66
    sflagelsflagel Posts: 585member
    Demand will taper off and then increase again, especially for the smaller watch as women warm up to it and when third party Apps integrate.

    Maybe Kuo is less bullish than usual because he has a Watch? I've had the Watch now for about a week and while I don't regret it at all, I would understand people that find it is a bit underwhelming. First, you can't actually do anything with it after unpacking, so it's a bit of a let-down. It just hangs there on your wrist. Of course we knew that, but still. Boring.

    The best thing one can do, is control music; that is totally awesome, but few have a fully AirPlay enabled home. (And unfortunately, it only works via Bluetooth not WiFi).

    Second, it really is all about the notifications, receiving Reminders, Messages, calendar invites on it is fantastic. So it will get much better when third party Apps provide the ability to respond (e.g., WhatsApp, FB Messenger). Email is a problem.

    And convenience: setting calendar items, reminders, starting a timer, calling someone, all by talking to your wrist is super cool. Would be great to have third party Apps voice controlled.

    The Watch will gain mass market appeal when one can truly leave the phone in the pocket or purse, or on the night stand when home. But right now, there are still a lot of instances when I need to grab my phone when I feel I shouldn't have to. It is actually annoying to receive a FB notification on the Watch and then having to look for the phone to respond. Before the Watch, if I didn't have my phone at least I did not know I had a message!

    But most if not all of these gaps can be closed with software updates, so I expect this thing to get better ever few months.

    (And no, health is useless. 10,000 steps a day means nothing. And I certainly don't need a watch to tell me if I walked a lot or not. After all, I was there....).
  • Reply 7 of 66
    slurpyslurpy Posts: 5,117member

    Why does AI insist on publishing this absolute drivel from these "analyst" charlatans?

     

    "Faced with production issues from launch, and amidst unknown levels of consumer demand, the Apple Watch is likely to see less than 15 million units shipped through the end of September, analyst Ming-Chi Kuo predicted on Wednesday."

     

    Oh wow, can't argue with those facts and that logic. Less than 15 million in a few months for a new product category? Absolute disaster. 

  • Reply 8 of 66
    Quote:

    Originally Posted by sflagel View Post


     I expect this thing to get better ever few months.

    I think so. I remember buying an iPad a week after they first came out, and after a few days, I thought it was pretty lame. Over time I found myself using it more and more in situations I wouldn't have predicted. Not saying this is the case for the Watch, but for me it's already becoming useful, mostly at work (messages) and for paying for stuff (Apple Pay). The problem I see for native apps is battery life. Battery life for me right now is stellar; when I get home at 6:30pm it's about 65% and I'm getting constantly messaged. With native apps and strong usage, that may tax the battery a lot. Wish it had a louder speaker for phone calls, maybe that's infeasible given its size. 

  • Reply 9 of 66
    sflagelsflagel Posts: 585member
    slurpy wrote: »
    Why does AI insist on publishing this absolute drivel from these "analyst" charlatans?

    "Faced with production issues from launch, and amidst unknown levels of consumer demand, the Apple Watch is likely to see less than 15 million units shipped through the end of September, analyst Ming-Chi Kuo predicted on Wednesday."

    Oh wow, can't argue with those facts and that logic. Less than 15 million in a few months for a new product category? Absolute disaster. 

    Where does he write it's a disaster? It's just a number.
  • Reply 10 of 66
    boozerboozer Posts: 19member

    Ordered mine Oct 20th not realizing that I was ordering the seemingly impossible for Apple to ship, black steel with link bracelet. The next day shipping was moved to July. This has to be the worst product launch for an Apple product (ever). I understand the logistic problems a custom product can bring but Apple pulled the trigger to quickly on the Apple Watch perhaps due to marketing windows and the calendar of future product launches. I'm a die hard fan of Apple products and have been since the early 90's but there is no excusing this launch although I'm sure many here will try just that. 

  • Reply 11 of 66
    rogifanrogifan Posts: 10,669member
    No red-colored Breaking tag? I'm shocked!
  • Reply 12 of 66
    rogifanrogifan Posts: 10,669member
    Kinda small, though.

    In 2007 Apple only sold 3.7M iPhones.
  • Reply 13 of 66
    sflagelsflagel Posts: 585member
    gregquinn wrote: »
    I think so. I remember buying an iPad a week after they first came out, and after a few days, I thought it was pretty lame. Over time I found myself using it more and more in situations I wouldn't have predicted. Not saying this is the case for the Watch, but for me it's already becoming useful, mostly at work (messages) and for paying for stuff (Apple Pay). The problem I see for native apps is battery life. Battery life for me right now is stellar; when I get home at 6:30pm it's about 65% and I'm getting constantly messaged. With native apps and strong usage, that may tax the battery a lot. Wish it had a louder speaker for phone calls, maybe that's infeasible given its size. 

    I know nothing about programming, but I don't think it has to drain the battery. Notifications don't drain it a lot and the app only launches when you tap the notification to respond. Just having FB Messenger, WhatsApp, FaceTime Audio (even if the caller is asking for video), email truncation, and music via iCloud would close a lot of gaps. Should be coming soon.
  • Reply 14 of 66
    Quote:

    Originally Posted by gregquinn View Post

     

    I think so. I remember buying an iPad a week after they first came out, and after a few days, I thought it was pretty lame. Over time I found myself using it more and more in situations I wouldn't have predicted. Not saying this is the case for the Watch, but for me it's already becoming useful, mostly at work (messages) and for paying for stuff (Apple Pay). The problem I see for native apps is battery life. Battery life for me right now is stellar; when I get home at 6:30pm it's about 65% and I'm getting constantly messaged. With native apps and strong usage, that may tax the battery a lot. Wish it had a louder speaker for phone calls, maybe that's infeasible given its size. 




    Depends, not having to cram all that data over BT might help save battery life.

  • Reply 15 of 66
    morkymorky Posts: 172member
    In other words they will generate more revenue from a single new product line in five months than the whole company did in fy 2004.
  • Reply 16 of 66
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     



    Depends, not having to cram all that data over BT might help save battery life.


    Yep.

  • Reply 17 of 66
    brucemcbrucemc Posts: 1,524member
    Quote:

    Originally Posted by Napoleon_PhoneApart View Post

     

    Kinda small, though.


    I am not convinced they will sell nearly that many by end of September 2015 (that was my top-end number for all of 2015, including the holiday season).  That by itself would have made it the best selling new Apple product in history (beating the iPad).  So you are saying that to sell 15M units of a new product (version 1.0) in 2 quarters is "kinda small"?  By what measure?

  • Reply 18 of 66
    blastdoorblastdoor Posts: 1,894member

    It seems hard to draw inferences about demand when it isn't even available to purchase in stores yet. I suspect there are a lot of people, and maybe particularly women, who want to be able to try it on and then buy the one they want on the spot. Scheduling an appointment to try it on and then placing a separate order online is kind of cumbersome. 

     

    Until Apple has good availability at retail, I don't think we'll have a very clear sense of what the real demand is. 

  • Reply 19 of 66
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by Blastdoor View Post

     

    I suspect there are a lot of people, and maybe particularly women, who want to be able to try it on and then buy the one they want on the spot. 


    I heard one women say that the Apple Store should have mirrors for women to see how they look wearing the watch. Seems like a reasonable request for a fashion item. I wonder if Angela decided against that feature or perhaps they figure that the fashion retailers will support that mode of sales.

  • Reply 20 of 66
    freediverxfreediverx Posts: 1,405member



    For me one of the biggest potential features is Siri. The voice recognition and transcription work really well, but more often than not the response instructs you to pull out your iPhone to see the results, which is pretty much pointless.

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