Morgan Stanley: Apple Watch demand up 60% in US since March, estimated 36M unit sales in first year

Posted:
in AAPL Investors edited May 2015
Countering an analyst report earlier on Wednesday predicting a plateau to Apple Watch demand, investment bank Morgan Stanley says U.S. consumer interest is not just strong, but is increasing, with first-year sales estimated to hit 36 million units.




Citing Morgan Stanley's AlphaWise U.S. Wearables survey, analyst Katy Huberty raised base case Apple Watch sales estimates 20 percent from 30 million units to 36 million units for the device's first 12 months of availability. She considers the estimate conservative, noting it implies only "definitely" buy survey responses (as opposed to "probably" will buy), assumes 50 percent U.S mix despite an existing 30 percent iPhone mix and disregards an increasing iPhone install base.

The survey showed Apple Watch purchase intent consistently rise over the past six months, with the biggest increase recorded after Apple launched in April, Huberty said.

Unfortunately, it might be difficult for Apple to capitalize on demand due to unforeseen production issues reportedly related to defective Taptic Engine vibrators. Over its first six months on sale, Huberty believes Apple's Watch supply will "significantly undershoot" demand, meaning the extra six million unit sales will be generated during the December 2015 and March 2016 quarters.

Earlier today, well-connected analyst Ming-Chi Kuo said Watch sales will come in under Street expectations as demand for the device is leveling off. According to his calculations, Apple will sell about 15 million Watch units over fiscal 2015, which ends in September.

In addition to healthy Apple Watch demand, Huberty anticipates an uptick in iPhone sales citing data from Morgan Stanley's AlphaWise Smartphone Tracker. Despite being relatively late in the current product cycle, the analyst estimates Apple will move 50 million iPhones for the quarter ending in June. Fiscal year estimates now stand at240 million and 249 million units for 2015 and 2016, respectively.
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Comments

  • Reply 1 of 45
    mubailimubaili Posts: 383member
    Don't get me wrong, I love my Apple Watch. But 36mm in first year seems high to me. Out of around 40 colleagues (> $200K salary) that have iPhone, 3 Apple Watches so far.
  • Reply 2 of 45
    michael scripmichael scrip Posts: 1,912member
    mubaili wrote: »
    Don't get me wrong, I love my Apple Watch. But 36mm in first year seems high to me. Out of around 40 colleagues (> $200K salary) that have iPhone, 3 Apple Watches so far.

    Yeah... 36 million in a year would be roughly 100,000 watches sold every day.

    That does seem a little high...
  • Reply 3 of 45
    mubaili wrote: »
    Don't get me wrong, I love my Apple Watch. But 36mm in first year seems high to me. Out of around 40 colleagues (> $200K salary) that have iPhone, 3 Apple Watches so far.

    Boy > 200k yearly and only 3 watches. Lots of cocaine I'm guessing
  • Reply 4 of 45
    jdwjdw Posts: 662member
    KGI Securities analyst Ming-Chi Kuo disagrees:

    http://www.macrumors.com/2015/05/20/apple-watch-demand-slowing-kuo/
  • Reply 5 of 45

    Aw, c'mon.  Kuo of KGI Securities just predicted today that AppleWatch sales would be way down due to DECREASED demand.  He said Apple would be lucky to sell 15 million AppleWatches this year and that would be considered greatly missed expectations and a disappointment to Wall Street investors.  These are the things I don't understand.  Two analysts look at AppleWatch trends and give totally opposite projections.  Who knows which one to believe?  I'll just go with Tim Cook's assessment that AppleWatch will have good sales although I don't recall him giving any sales numbers.  I'd think if Apple sold only 15 million AppleWatches this year, it would be considered a successful launch, but that's just the way I see it.  I'm simply not as greedy as those big Wall Street investor pricks are.  Anyway, I feel that only Apple can decide what sales numbers are good because they're the only ones who could have an idea of demand of a completely new product.  These jackass pundits wouldn't know a damn thing about Apple's sales goals.

  • Reply 6 of 45
    theothergeofftheothergeoff Posts: 2,075member
    Quote:

    Originally Posted by mubaili View Post



    Don't get me wrong, I love my Apple Watch. But 36mm in first year seems high to me. Out of around 40 colleagues (> $200K salary) that have iPhone, 3 Apple Watches so far.

    Hmm, I think you just proved their point, and mathematically your numbers show MS is being conservative..

     

    40 user sample

    3 watch users

    7.5% 

     

    7.5% of 500Million AppleID accounts (a 2013 number) would be... 37.5 Million.

  • Reply 7 of 45
    danielswdanielsw Posts: 905member

    I think what throws a lot of people off is the fact that it's called a "watch." Not that it shouldn't be, because it is worn on the wrist in the same place that watches have traditionally been worn. But "watch" is a misnomer for this wearable computing device.

     

    When more people realize this, and when they realize how well it and its apps work in their respective Apple ecosystems, the demand for it will mushroom—all over the world.

     

    It may take some time yet for developers to also come up with clever and useful apps to make it do so many things, some of which were never thought of before the Apple Watch.

  • Reply 8 of 45
    Quote:

    Originally Posted by TheOtherGeoff View Post

     

    Hmm, I think you just proved their point, and mathematically your numbers show MS is being conservative..

     

    40 user sample

    3 watch users

    7.5% 

     

    7.5% of 500Million AppleID accounts (a 2013 number) would be... 37.5 Million.




    I doubt a significant portion of 500Million AppleID accounts are >$200k though.

    I suspect Apple users earning >$200K are more likely to buy an apple watch.

  • Reply 9 of 45
    Why is Ming Chi "well connected" and yet Huberty is not?
  • Reply 10 of 45
    roakeroake Posts: 619member

    I decided to make the plunge on an Apple Watch today after finding out that it works with Spok Mobile, which we use as a messaging service where I work.  Mine was quoted 4-6 weeks for delivery.

     

    Somewhat interestingly, I looked at the 38mm Apple Watch with sports band (same for white and black), where the quote was 1-2 weeks for delivery.

     

    EDIT: Looks like every 38mm Apple Watch (didn't check Apple Watch Sport or Edition) is quoted 1-2 weeks for shipment.  All the 42mm are longer.  This is regardless of bands chosen.

  • Reply 11 of 45
    mdriftmeyermdriftmeyer Posts: 7,185member
    mubaili wrote: »
    Don't get me wrong, I love my Apple Watch. But 36mm in first year seems high to me. Out of around 40 colleagues (> $200K salary) that have iPhone, 3 Apple Watches so far.

    Apple has 700 million iPhone customers. 36 million is pittance.
  • Reply 12 of 45
    chris_cachris_ca Posts: 2,543member
    Quote:

    Originally Posted by mdriftmeyer View Post

    Apple has 700 million iPhone customers. 36 million is pittance.

    You mean Apple has sold 700 million iPhones.

    Likely, most to those were repeat buyer..

  • Reply 13 of 45
    badmonkbadmonk Posts: 742member
    KH & MCK are saying the same thing...MCK says 15 million by September, another 21 million (to make 36 million) in the next six months seems like the usual APPL production/sales ramp up. I live in a non-urban area in the US, I have seen two Apple Watchs in the wild (and know something who has ordered one).

    The interest is there, people talk about it when they see it. Not quite on the level of excitement as when I bought an original iPhone and iPad but the interest is there.

    In Asia it will sell like hotcakes because it will be seen as a status item. In the US, it will be a bit more tepid. I for one think people who will be buying the higher end stainless steel (or gold) watches, will wait for version 2.

    The Watch was a smart, well executed move by Apple. Now that they have saddled us with iPhone 6+s, they gave us the "cure" to be free of them by giving us a limited portal to the device on our wrists.
  • Reply 14 of 45
    jfc1138jfc1138 Posts: 3,090member

    I doubt a significant portion of 500Million AppleID accounts are >$200k though.
    I suspect Apple users earning >$200K are more likely to buy an apple watch.
    Why? They start at $350 and there's no service contract. That's a pretty cheap Apple gadget: no trophy for the >$200k wrist to flash at the club....
  • Reply 15 of 45
    calicali Posts: 3,495member
    mubaili wrote: »
    Don't get me wrong, I love my Apple Watch. But 36mm in first year seems high to me. Out of around 40 colleagues (> $200K salary) that have iPhone, 3 Apple Watches so far.

    They still have 11 months to buy one so...
  • Reply 16 of 45
    applesauce007applesauce007 Posts: 1,570member

    Considering that it still requires 4 to 6 weeks to get a 42mm stainless steel with black sports band, I would tend to agree with Morgan Stanley.

     

    I have an Apple watch and I think it's awesome!

    I know several people who are trying to get one.

     

    Time will tell.

  • Reply 17 of 45
    blitz1blitz1 Posts: 410member
    danielsw wrote: »
    I think what throws a lot of people off is the fact that it's called a "watch." Not that it shouldn't be, because it is worn on the wrist in the same place that watches have traditionally been worn. But "watch" is a misnomer for this wearable computing device.

    When more people realize this, and when they realize how well it and its apps work in their respective Apple ecosystems, the demand for it will mushroom—all over the world.

    It may take some time yet for developers to also come up with clever and useful apps to make it do so many things, some of which were never thought of before the Apple Watch.

    That's the thing: it doesn't work well yet.
    Did you miss all the reviews talking about the potential and that this is really just a 1.0 device?
  • Reply 18 of 45

    I wish Apple Watch would roll out faster. I know I'm not the only one.

  • Reply 19 of 45
    SpamSandwichSpamSandwich Posts: 30,415member
    Why is Ming Chi "well connected" and yet Huberty is not?

    Kuo's press releases come pre-filled with honorifics.
  • Reply 20 of 45
    Quote:

    Originally Posted by mubaili View Post



    Don't get me wrong, I love my Apple Watch. But 36mm in first year seems high to me. Out of around 40 colleagues (> $200K salary) that have iPhone, 3 Apple Watches so far.

    Have you polled them to see how many are waiting for delivery because they didn't get their order in before 3:01:30am on April 10th?  By mid-June when deliveries start to catch up with pre-orders you might notice a much larger percent of those people sporting the Apple Watch.

     

    My order finally went through at 3:19am for a 42mm black sport model and delivery is expected between May 29 and June 11th...

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