KGI: iPhone sales forecast at 54M in Q3, Apple Watch demand 'tepid' at 4M shipped units

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  • Reply 101 of 115

    Let's analyze Kuo's report....

     

    In a research note obtained by AppleInsider on Saturday, Kuo estimates Apple shipped 54.2 million iPhones, 8.8 million iPads, 5.4 million Macs and 3.9 million Apple Watches over the three-month period ending in June. Compared to the same time last year, iPhone and Mac shipments are up 54 percent and 21.6 percent, respectively, though iPad faced yet another decline to the tune of 33.5 percent.

     

    Kuo estimates that Apple shipped 1.5 million fewer Watches than Macs over the three-month period ending in June. Now lets just assume, everyone who purchased an Apple Watch purchased the $349.00 Sport. Using that assumption, in the three-month period ending in June, Apple is estimated to have earned $1,361,100,000. So, using Kuo's estimation of 3.9 million Apple Watch shipments, in three months Apple is estimated to have created a new revenue stream of more than $1 billion in three months.

     

    Moving on to the next paragraph that references the Apple Watch...



    Aside from iPhone, industry watchers are perhaps most interested in Apple Watch, the first project to move from inception to release under CEO Tim Cook. Kuo describes consumer response as tepid, however, saying that while shipments will rise 41.1 percent sequentially next quarter to 5.5 million units, gains can be attributed to availability in new markets. Overall, total Watch shipments are expected to reach 15 million units for 2015.

     

    Kuo describes consumer response as tepid

    A brand new industry for Apple is estimated to have shipped 3.9 million units, which would have generated over $1 billion in three months in considered tepid in well-connected Ming Kuo's mind. No one in the press is questioning this logic? Fortune, Forbes, CNBC, NY Times, WSJ, LA Times, Financial Times, Washington Post, Market Watch, Barrons, Gene Munster, Brian White, Gartner, IDC, Strategy Analytics, Apple Insider, and on and on and on. A $1 billion revenue stream is an industry unto itself in my humble opinion. But I am not a well-connected analyst like Ming Kuo so, I cannot be listened to on a subject like this.

     

    however, saying that while shipments will rise 41.1 percent sequentially next quarter to 5.5 million units, gains can be attributed to availability in new markets

    Now sh*t! Really? Apple entering new markets could actually boost shipments of the Apple Watch? Thank God, Kuo knows that making a product available in more markets could just possibly help a product reach more people. Again, no one is questioning Kuo's logic.

     

    Overall, total Watch shipments are expected to reach 15 million units for 2015.

    Again using the lowest priced Apple Watch of $349 and using Kuo's estimate, Apple is on track to earning $5,235,000,000 during an 8-month first generation product.

     

    So where is any rational thinking going on? In three months Apple is estimated to have created a market for itself that dwarfed all estimated shipments of Android Wear and Tizen smartwatches ever shipped in 24 months. Kuo calls this tepid and the financial world agrees.

     

    But, the future looks brighter because Apple will be entering new markets which will give Apple an additional 5.5 million shipments to offset the previous three months of tepid 3.9 million shipments. So, Apple is estimated to ship an additional QoQ 1.6 million Apple Watches during the next three months and that is OOOOOOOOOOOKKKKKKKKKAAAAAAAAYYYYYYYYY. This means Apple is estimated to match or surpass quarterly shipments of the Mac during the July-September quarter. Does this outcome mean that Mac shipments are lackluster compared to Apple Watch shipments in Kuo's mind?

     

    Reaching the estimated 15 million shipments Kuo mark means what? Apple failed against competitor smart watches in 2015? Apple ONLY generated an estimated $5+ billion revenue stream for a brand new first generation device that outperformed the first generation iPhone? Apple did not ship more units than FitBit so, Apple failed and FitBit won? Tim Cook has to go because the Apple Watch was released under his watch and the Watch only reached 15 million people and only generated $5 billion in 8 months? Generating a $5+ billion industry is not enough to move the needle for a company like Apple?

     

    Oh well, Monday is coming and there will be even more reports about how tepid Apple Watch sales are compared to... Nothing because if a comparison on sales + earnings was made, Apple would be getting rave reviews, which just might have end of world predications coming true.

     

    Where is a real news person who is willing to actually call out well-connected analyst Ming Kuo?

  • Reply 102 of 115
    hmmhmm Posts: 3,405member
    Quote:

    Originally Posted by Rogifan View Post





    Well Google just jumped 16% on Friday so I don't expect to see one any time soon.

    The same thing has happened with Apple at different points, and the correction can be pretty sharp over the short term, even in cases where it makes some sense over the longer term. Going by your estimated PE, that's much higher than you would typically see with a company of that size. I'm with anantksundaram on this one though. If I had the unallocated funds, I would be tempted to do the same thing.

     

    Quote:

    Originally Posted by anantksundaram View Post





    Looking forward to buying some GOOG puts tomorrow morning. Seriously. image



    Hope the stock price doesn't go down too much before open.

  • Reply 103 of 115
    pscooter63pscooter63 Posts: 929member
    Quote:
    Originally Posted by anantksundaram View Post

     

    Yeah, yeah, yeah. You've been ranting about the Watch since the day it was announced. Surprise us and say something different.

     

    Your kids are getting only 8 hours? Well, all I can say is that Apple must be shipping its quality control reject Watches to Switzerland. You know, to give your national industry a bit of (false) hope....<img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />


     

    Reading Relic's post a little more carefully, I don't think her kids have AWs, I think she did a stream-of-consciousness leap to "Android watches", and the rest of the post is actually about those.

  • Reply 104 of 115
    boltsfan17boltsfan17 Posts: 2,161member
    Quote:
    Originally Posted by sog35 View Post





    If you consider Apple a lobbyist than I'm a lobbyiest since I wrote to the FASB board about an issue with the current standards on Goodwill impairment. Thats not lobbying. Thats called working with the standards board to write rules that are based on the realities of business. By your definition of lobbying anyone who writes a letter to there congressman or governor is a lobbyiest. Silly.

    Huh? What does lobbying have to do with anything I said in my post? I didn't mention anything about saying Apple is a lobbyist. I assume you clicked on the wrong post and accidentally quoted me. 

  • Reply 105 of 115
    steveausteveau Posts: 238member
    Calling sales of 15M in 2015 'tepid' "is some new use of the word of which I was previously unaware" (I miss Douglas Adams).
    I'm making no comment about Ming-Chi Kuo's reliability, because I like to compare the comments of a number of these 'analysts' and figure out the real picture for myself. Having got that out of the way, product shipped data are useless without data on unshipped inventory (and unsold inventory in the sales channel, if that is significant factor), profit margins, etc. Making 1.3 million A-Watches a month and shipping all of them is a great result (assuming a good profit margin), but making 1.4M and only shipping 1.3M would indicate a problem.
  • Reply 106 of 115
    herbapouherbapou Posts: 2,221member
    slurpy wrote: »
    How the **** is an expectation of 15,000,000+ of a 1gen product, within 6 months, that REQUIRES an iPhone, "tepid"? **** these analysts without an ounce of context or perspective. If Apple Watch sells anywhere near 15million in 2015, it would have shit on every single 1st gen Apple product, ever, by a massive margin.

    The tepid term refers to market expectations, not absolute numbers. Some analysts are expecting 50 millions iwatch sales in 2015, which is completly off.

    Imi this product wont sale in volume until its a stand alone product.
  • Reply 107 of 115
    brucemcbrucemc Posts: 1,528member
    Quote:

    Originally Posted by herbapou View Post

    The tepid term refers to market expectations, not absolute numbers. Some analysts are expecting 50 millions iwatch sales in 2015, which is completly off.



    Imi this product wont sale in volume until its a stand alone product.

    Everyone has their opinion.  My own view was that selling more than 10M in the calendar year after intro (e.g. by April 2016) would be classified as a success for first gen product accessory to iPhone, where the starting price is $349 USD (and many estimates of ASP being over $500).  If indeed they sell 15M by end of 2015, that would be an amazing success.  For certain, there are always those analysts who want to get their name in the media and made ridiculous predictions, like selling 40M or more in 2015, simply using a % of iPhone sales as proxy.

     

    For those that constantly bring up the need for a "standalone product", I would like to understand the rationale.  I mean it already is standalone in many ways (especially with WatchOS 2) - many functions can work on WiFi.  The smart phone is now the most popular CE/communication device in existence, and many people take it with them everywhere (other than little jaunts like exercise for some).  So, saying you need to have an iPhone with you (for always on communication) is not really that big of a deal is it, since most always carry their iPhone with them?  Do you want to have a separate cellular and phone number for the Watch, in addition to your smartphone?  Do you think that people with Android phones will buy an Apple Watch?  The Apple Watch is not meant to replace all the functionality of the iPhone, so that someone would opt for Apple Watch only.

     

    Not meaning to be critical, but I think this thinking - "well if it requires an iPhone for some functions then it won't sell" - is just an automatic response without looking deeper into it.

  • Reply 108 of 115
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by Dick Applebaum View Post



    Then, there's the whole dietary intake potential. What if you could tell your Apple Watch that you are treating yourself to In-N-Out: Fries, Vanilla Shake, Burger -- Animal Style. And the Watch (via the iPhone) could retrieve the dietary breakdown (Calories, Fat, Sodium, etc.) of the meal and save it along with your fitness information -- and suggest activities to compensate for your treat.

    Tracking your dietary intake or physical activity is only useful if it is accurate. In your burger/fries example, you use a restaurant chain where the nutrition facts are online. Counting calories is usually not a successful way to manage your health anyway, because it is imprecise.  I never eat at fast food restaurants and always prepare fresh ingredients at home. Common sense is a better way of managing your health than counting calories.

     

    Another example: This past weekend I was out in the garden doing a lot of physical activity. I was not wearing my ?Watch because I did not want to get it dirty or scratched. When I put the watch on this morning it promptly notified me that I did not achieve my activity goals for the week, despite my aching muscles. Calories burned by activity are also only a small subset of total daily calories burned. Again common sense is a much better guide to good health. Eat healthy, get exercise, sleep well, drink lots of water, and don't do anything to excess.

  • Reply 109 of 115
    asdasdasdasd Posts: 5,312member
     
    Originally Posted by sog35 View Post





    Your kids have Apple watches?



    And whats the big deal about charging your watch? Dont you charge your phone each night? It literally takes 2 seconds to place your watch on the charger. This should be zero problem unless you wear your watch at night.



    How many people thought the iPad was revolutionary when it first came out? Not many. Most thought it was unneccesaary just like the Watch. The iPhone wasnt really revolutionary either. Basically just a pocket computer. The Watch is basicly just a even smaller computer that is always connected to you. It is the future of computing devices.



    But if you have vision you can see the Watch is an extremly important device. IMO the watch has the potential to replace the phone in 5 years as the defacto personal device. Apple had no choice but to make a strong move into wearables or else they were risking being left behind. And what if wearables dont take off in the near term. No problem. They still have the iPhone. Basicly Apple has both sides covered and is in prime position to take the leadership position in the next form factor of computing devices. Those who dont see this are short sighted and are not seeing the forest from the trees.

     

    The iPhone most definitely was revolutionary, I bought one on the first day and so long BB. The iPad, not really -- since it was a larger version of the phone with a slightly modified OS. I got a V1, don't use it. My phone and Mac are all I need. That said there is a market, my mom loves hers. 

     

    However it looks like Jobs was wrong about trucks and cars. As it now stands the Mac is accelerating in sales, while the tablet market is stagnant or falling significantly. Stuck somewhere between a PC and the phone is not a good position, the future I bet is a cheaper version of the new Mac Book. The iPad will survive but not be dominant.

     

     

    Quote:
    Originally Posted by sog35 View Post





    But you dont mind having them in your pocket?



    You dont mind reaching in your pocket dozens of times a day?



    The long range plan is for the watch to replace the phone. Those who dont see this have zero vision and have not learned about the past.



    Computing devices get smaller and closer to our body as the advance.



    Supercomputer, desktop, laptop, phone, wearable.

     

     

    In no sense can a watch take over from an iPhone. I have no idea what you use yours for but on my commute, and at other times, I use it to read books, read the internet ( like this site and others), respond to threads on the internet, read emails, browse twitter, listen to music, watch movies and sometimes play games. At other times I use it for maps, SMS, phone calls and on and on.  I don't really have notifications on. The watch can do very little of that as well as a phone, if at all and never will because it doesn't have enough screen real estate. At the moment its got a good mechanism for alerting you to notifications you may not have noticed. Until it decouples from the iPhone and has something, maybe something medical, that just can't be replicated by the phone I don't see it as very useful. 

     

    ?Also you can't extrapolate to increasing tinyness because super computers were replaced by desktops which were replaced by phones ( not true anyway). The internet needs screen space, and Apple's next big thing will be on TV screens. And the iPhone isn't getting smaller, and theres a reason for that. The screen size matters when you are reading or watching movies. The watch isn't going to replace that, it needs its own thing.

  • Reply 110 of 115
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by asdasd View Post

     

     

    However it looks like Jobs was wrong about trucks and cars. As it now stands the Mac is accelerating in sales, while the tablet market is stagnant or falling significantly. Stuck somewhere between a PC and the phone is not a good position, the future I bet is a cheaper version of the new Mac Book. The iPad will survive but not be dominant.


    I always disagreed with that analogy, but I'm a power user. I always turn to my desktop first even for just consuming content or participating in an online forum or correspondence. iPad is very awkward for typing, tiresome to hold and not very ergonomic in my opinion. I have a couple of them, but don't use them very often. Everybody's use case is different, but for me, my routine is to check my iPhone for messages when I get up, then I go to the office where I use Macs all day, then I go home where I use an iMac or just stay away from computing altogether. There is an iPad on the coffee table in the family room if you want to look up something while watching TV.

  • Reply 111 of 115
    asdasdasdasd Posts: 5,312member
    sog35 wrote: »
    People said the same thing about smartphones 10 years ago.  Too small to be a primary computing device.  They have been proven wrong as the technology of the smartphone advanced.  You are saying the screen on the Watch is too small to be a standalone product.  Can't you see you are repeating the same mistake as those who doubted the smartphone?  Do  you seriously think the AppleWatch will look the same in 5 years as it does now?  Do you seriously think its screen will still be as small as it is now?

    Nobody ten years ago saw the then "smart phones" taking over as a user's primary computing device. The trend pre iPhone was smaller devices. The trend post iPhone (including the original) is bigger mobile devices. You should compare the original iPhone with a 6 to see this. In fact Jobs, in his 2007 presentation, said that the problem with existing phones was the physical keyboard which made the screens tiny. Naysayers of the iPhone (the real first smart phone of the modern era) said it was too big, in fact. So not only is your general argument to extrapolation wrong, your facts are wrong. Everything is not getting smaller.
    No. Laptops replaced desktops in many applications.  Then smartphones replaced laptops.

    Laptops "replaced" desktops for portability reasons but many people hook them up to monitors. And I put "replaced" in quotes because desktops still sell. As do laptops, which haven't been replaced by smartphones.

    You have a funny few of technology where everything is replaced by smaller items. That's not what is happening, what's happening is the computing market is diversifying. Nothing is getting replaced, the market of all personal computing devices is expanding.
    The large screen iPhones are replacing tablets.  So yes screens are getting smaller and closer to your body.

    I think you realise here that since phones are getting bigger your "everything is getting smaller" ideology is under threat so now you claim smart phones are replacing tablets, as opposed to laptops. However modern tablet came after phones, and tablets aren't replacing laptops. In fact -- sticking with Apple -- the Mac looks like it is positioned to grow for years and the tablet is stagnating. A laptop is just more useful.
    yes with little vision.  Again I ask do you think the Watch screen will be the same size as it is now in 5 years?  10 years?


    Do you seriously think we won't see advances in screen technology in 5-10 years?  Foldable screens, rollable screens, holograms, projection, ect.  Open your mind.

    When wearable computers becomes socially acceptable we will see bigger watch screens and much bigger units.  I can see a standalone 'watch' that has a 4-5 inch flexable screen that looks more like a thick band than a watch.  

    Yee with too much "vision" and not enough logic. Do I think the watch will have a bigger screen? No. It wouldn't be a watch if it did. The flexible screen technology sounds awkward but if that did happen you've effectively admitted that it needs a bigger screen to be as functional as a phone ( thus negating the everything is getting smaller argument).

    I might get a version 2 or 3 of the watch. If it's decoupled from the phone ( so I can jog without it) or Apple pay takes off where I live, and most useful would be more sensors, attached or linked to it.

    But it won't replace the iPhone. Just as the iPhone didn't replace the Mac book pro I have.

    So I agree that Apple is hedging its bets, and could come good in 2-4 years in wearables and needs to be in this market. We're probably agreed about the analysts. Where we disagree is what is the primary device. That's going to be a phone for me for the foreseeable future. I don't believe in the "replacement" model of computing either, the market just expands.
  • Reply 112 of 115
    asdasdasdasd Posts: 5,312member
    Quote:
    Originally Posted by sog35 View Post

     

     

    I think we actually agree on many things but we may be on different time tables.  If I'm guessing you probably think wearables will take over smartphones DECADES from now.  But it will happen.  I think it will happen much sooner.  But the beautiful part about it for Apple is they are ready either way.  If wearables don't take off in the next 5-10 years they still have the iPhone.  


     

    I think we do agree on many things, but not on this. I think the iWatch will be a success, as do you. I think it will take longer than you. I think Apple needs to be in this space, as do you. What we differ on is what is the main device.

     

    I think I'l be using a phone as my primary portable device in 2050, if I live that long. Of course that phone will be a very fast computer, as it is now. It will be augmented by the watch and other wearables, some which may be very powerful indeed but I don't see that the screen issue will go away. Either the watch remains a watch ( i.e wearable on your wrist and primarily a device to tell the time) in which case it remains with a tiny screen, or it changes into something else, which isn't a watch. I am not really being thrown by the name, I don't think that flexible screens will work. Basically in imaginations of the future, like star trek, something like a laptop exists, something like a tablet exists, and something like a wearable exists, but they all exist simultaneously. 

     

    They are in the best position to dominate the personal computing device (what ever form it takes) for the next decade at least.

     



     

    I agree that Apple will dominate, because owning the whole widget is the most important thing. 

  • Reply 113 of 115
    brucemcbrucemc Posts: 1,528member
    Quote:

    Originally Posted by asdasd View Post

    I think we do agree on many things, but not on this. I think the iWatch will be a success, as do you. I think it will take longer than you. I think Apple needs to be in this space, as do you. What we differ on is what is the main device.

     

    I think I'l be using a phone as my primary portable device in 2050, if I live that long. Of course that phone will be a very fast computer, as it is now. It will be augmented by the watch and other wearables, some which may be very powerful indeed but I don't see that the screen issue will go away. Either the watch remains a watch ( i.e wearable on your wrist and primarily a device to tell the time) in which case it remains with a tiny screen, or it changes into something else, which isn't a watch. I am not really being thrown by the name, I don't think that flexible screens will work. Basically in imaginations of the future, like star trek, something like a laptop exists, something like a tablet exists, and something like a wearable exists, but they all exist simultaneously. 

     

    I agree that Apple will dominate, because owning the whole widget is the most important thing. 


    Just to comment on the theme of computing getting smaller, and the mainframe -> mini-computer -> desktop -> laptop -> mobile phone discussion.  IMO, this is not about "screen size", but rather about the functionality that both distributed computing and mobility offer.  As computing power increased & price/power dropped, it became more distributed, enabling new models.  More persons/groups could use computing, and its usefulness increased.  PC's enabled new functionality in the office and at home.  Laptops then brought in a measure of mobility (though initially of course they always had to be plugged into some cable wire for connectivity), and applications changed, and more functions could be done with computers (jobs where you had to go from place to place).  Smart phones (iPhone + era) greatly increased that mobility, and as such increased the use cases.

     

    The point is that as the computing went more distributed and more mobile, the applications didn't remain the same.  Most people didn't use mainframe applications on their PC's, and most people do not use desktop applications on their mobile phones (though this is supported for those that need a measure of functionality).  The applications and use cases change.  The functions of the "jobs to be done" are different.  It is only now, 8 years after the intro of the modern smartphone, that we see the impact it has on how jobs get done.  While "office desktop" jobs might not be as affected, occupations such as real estate, construction, sales, etc - are adapting new models.  

     

    This trend is what is important w.r.t. wearables.  Sog aside, I don't know anyone that thinks the smart watch will replace the mobile phone anytime in the next 5 years (though the main communication functions may move to it).  The smart watch brings computing to your "person", and so enables new modes of interaction, new functions, new use cases.  The areas of impact (again, not in generation 1, but should be visible in 5 years):

    - Health.  Clearly a wearable is much more useful here than a phone.  Heart rate today, many more tomorrow.

    - Exercise.  Maybe a minority, but quite useful to have a multi-purpose device instead of niche one,

    - Identity.  It is on you, and can detect when it is not.  One time authentication & the watch = You.  ApplePay is first app.  More to come.

    - Voice interaction.  You see both Google and Apple really moving into the situation aware state, with voice as the UI.  As someone with Apple Watch, I can attest that Siri is far more easily accessed on watch vs. phone.

    - Internet of Things interaction.  Something always with you, and with your identity, is more useful.

    ...the list will grow

     

    Finally, none of this means the other modes of computing "go away", least not in short or intermediate term.  They may not grow as they once did.  Mainframes became servers to power the applications of the devices.  Both desktop (large screen) and laptops will remain as they can do some jobs better (key board & large screen).  Tablets are relatively new (just hit 5 year mark in the new era), and so applications are evolving.  These are better for some tasks vs. PC/laptop, and vs. phone.  Phones will remain as primary mobile needs for some time, as it requires a screen you can read and touch - though always possible that the communication chip may move to the watch & that is primary means of comms in the future.  The mobile device then is like a "companion iPod".  Smart watches add something new.

     

    The debate over screen size is a bit off.  Clearly different tasks call for different sizes, but that isn't really about the shrinking of computer technology and how it becomes distributed, more mobile, more personal & used in different ways.

  • Reply 114 of 115
    asciiascii Posts: 5,941member
    Quote:

    Originally Posted by brucemc View Post

     

    The smart watch brings computing to your "person", and so enables new modes of interaction, new functions, new use cases.  The areas of impact (again, not in generation 1, but should be visible in 5 years):

    - Health.  Clearly a wearable is much more useful here than a phone.  Heart rate today, many more tomorrow.

    - Exercise.  Maybe a minority, but quite useful to have a multi-purpose device instead of niche one,

    - Identity.  It is on you, and can detect when it is not.  One time authentication & the watch = You.  ApplePay is first app.  More to come.

    - Voice interaction.  You see both Google and Apple really moving into the situation aware state, with voice as the UI.  As someone with Apple Watch, I can attest that Siri is far more easily accessed on watch vs. phone.

    - Internet of Things interaction.  Something always with you, and with your identity, is more useful.


     

    I agree with this list. As Siri gets smarter, it will be like everyone has a PA, not just executives, and the Watch will be the interface to that. And I'm sure it will get more sensors over time too.

     

    The Watch won't primarily be a communication device like a phone is, not all mobile devices have to be communication-centric. It will be something that monitors you through sensors and assists you through a digital assistant, as well as the identity function you mentioned.

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