Apple's 'Other' segment swings positive for first time, suggests strong Apple Watch performance

Posted:
in Apple Watch edited July 2015
Since lumping devices like iPod, Apple TV and Beats hardware together under an umbrella accounting category named "Other products" in January, Apple has only seen the segment bleed out. That ended Tuesday when the company announced "Other" jumped 56 percent sequentially during the third fiscal quarter of 2015, attributed at least in part to Apple Watch sales.




Investors and industry pundits alike have been waiting for Apple's "Other" results since the company announced it would add Apple Watch to the category instead of breaking those numbers out into a separate segment.

According to Apple's published earnings, revenue from the catchall category reached $2.64 billion, a positive sequential change of 56 percent and year-over-year change of 49 percent. Since Apple Watch sales kicked off in April, quarter-over-quarter results relate more directly to the wearable's impact. During an investor conference call, CFO Luca Maestri said Apple Watch accounted for over 100 percent of category growth, which "more than offset" losses attributed to iPod.

"Other" helped push overall revenue up 33 percent, which CEO Tim Cook said was Apple's fastest quarterly growth in three years.

Despite speaking at length on Apple Watch merits, uses and speedy adoption, Cook expectedly declined to mention exact sales numbers during Apple's quarterly conference call. The company does not plan to break out numbers at this point as it wants to keep competitors also building smartwatches in the dark.

Comments

  • Reply 1 of 19
    konqerrorkonqerror Posts: 685member
    Actually, it was a complete miss according to analyst estimates. The number thrown around was $5 Billion of Other = 5 Million Watches.

    So if we have a 50% increase, that's about $1.5 B of Apple Watches. Assume an average selling price of $400, that's 3.75 M Watches... Thats in the neighborhood of everybody's estimates, in line with Slice's 3 million US watches in 3 months. Long way to 30 Million...
  • Reply 2 of 19
    sphericspheric Posts: 2,058member
    What do you mean by "complete miss"???
  • Reply 3 of 19
    solipsismysolipsismy Posts: 5,099member
    konqerror wrote: »
    Actually, it was a complete miss according to analyst estimates. The number thrown around was $5 Billion of Other = 5 Million Watches.

    So if we have a 50% increase, that's about $1.5 B of Apple Watches. Assume an average selling price of $400, that's 3.75 M Watches... Thats in the neighborhood of everybody's estimates, in line with Slice's 3 million US watches in 3 months. Long way to 30 Million...

    You don't think over 3MM in just 3 months for a debut accessory device with an ASP of $400 is impressive?
  • Reply 4 of 19
    dasanman69dasanman69 Posts: 13,001member
    spheric wrote: »
    What do you mean by "complete miss"???

    Here's one type of complete Miss for you. :)
    400
  • Reply 5 of 19
    9secondko9secondko Posts: 929member
    So... The watch pretty much not only saves a sinking "other" ship, but sets it on a positive course mostl likely all by itself, and... The stock is down...

    Someone with too much power really hates Apple. Lol
  • Reply 6 of 19
    mac_128mac_128 Posts: 3,454member
    Quote:
    Originally Posted by konqerror View Post

    So if we have a 50% increase, that's about $1.5 B of Apple Watches. Assume an average selling price of $400, that's 3.75 M Watches... Thats in the neighborhood of everybody's estimates, in line with Slice's 3 million US watches in 3 months. Long way to 30 Million...

    That's an excellent number. Not as high as the 5 million being suggested, but well above the 1 million it needed to outsell the rest of the smartwatch market combined. That said, unless Christmas makes as big an impact as the initial demand, the year-end total is likely going to be closer to 9 million, that 15 million. But still, that's an excellent start to such an ambiguous product. Moreover, that's all the Sport and Watch models as the Editions weren't really shipping until July.

  • Reply 7 of 19
    What does "bleed out" mean? In the red I guess? Maybe list the numbers for Other, from prior quarters so we can understand exactly this trend.
  • Reply 8 of 19
    nolamacguynolamacguy Posts: 4,758member
    konqerror wrote: »
    Actually, it was a complete miss according to analyst estimates. The number thrown around was $5 Billion of Other = 5 Million Watches.

    So if we have a 50% increase, that's about $1.5 B of Apple Watches. Assume an average selling price of $400, that's 3.75 M Watches... Thats in the neighborhood of everybody's estimates, in line with Slice's 3 million US watches in 3 months. Long way to 30 Million...

    what 30 million??
  • Reply 9 of 19
    ecatsecats Posts: 272member

    There are so many problems with the napkin-math being applied in this thread. You can't just say that the 49% year/year change is due to the watch, similarly you can't say that the 56% sequential change is all in watch sales (although it's a better figure to work by of the two.)

     

    You also can't make up an average selling price, you can only develop a range: e.g. if all new sales were watches and all of those were the cheapest watch makes the 100% optimistic unit number, then you can work down from there. The numbers will be closer to the optimistic range for two reasons: No other major introductions to the "Other Products" category, the minimum price for the watch exceeds most other devices in the category, and the high availability and purchasing of the Apple Watch Sports edition (the cheapest model.)

     

    This lands the watch around the 3M mark, for a device that with limited availability, requires an iPhone, limited countries, a short quarter and new product. If that needs digestion: let me just say that it's not just an exceptional start, but it's the best new device launch Apple has ever had.

     

    However hubris is not needed, consumer buying habits would peg the user updating their apple watch less frequently than their phone (but more frequently than say an iPad or AppleTV.)

  • Reply 10 of 19
    iobserveiobserve Posts: 96member
    Quote:

    Originally Posted by ECats View Post

     

    There are so many problems with the napkin-math being applied in this thread. You can't just say that the 49% year/year change is due to the watch, similarly you can't say that the 56% sequential change is all in watch sales (although it's a better figure to work by of the two.)

     

    You also can't make up an average selling price, you can only develop a range: e.g. if all new sales were watches and all of those were the cheapest watch makes the 100% optimistic unit number, then you can work down from there. The numbers will be closer to the optimistic range for two reasons: No other major introductions to the "Other Products" category, the minimum price for the watch exceeds most other devices in the category, and the high availability and purchasing of the Apple Watch Sports edition (the cheapest model.)

     

    This lands the watch around the 3M mark, for a device that with limited availability, requires an iPhone, limited countries, a short quarter and new product. If that needs digestion: let me just say that it's not just an exceptional start, but it's the best new device launch Apple has ever had.

     

    However hubris is not needed, consumer buying habits would peg the user updating their apple watch less frequently than their phone (but more frequently than say an iPad or AppleTV.)




    Excellent post.

     

    Don't forget, Apple also "defers revenue" of new products sold. In the case of iPhone it's 5-10%. This revenue for the watch wasn't even reported this quarter, it will be spread over the device's lifetime.

     

    Additionally, and this one is curiosity, during the period Apple made a recall of some Beats products. It is entirely possible they wrote it off under the "other" category as well. It wasn't disclosed how much a hit apple wrote off for the recall.

     

    All we can really glean from these numbers is that Apple at least sold over 1 billion worth of watches in its launch quarter, making the Apple Watch the most successful product launch in Apple's history.

  • Reply 11 of 19
    jakebjakeb Posts: 559member
    It's crazy how excited people get for any chance to claim that Apple is doomed.

    I'm not concerned for the company, but I do get concerned for the brand when I see so many people rooting for them to fail. What other companies get that kind of hate directed their way?
  • Reply 12 of 19
    foggyhillfoggyhill Posts: 4,767member
    Quote:

    Originally Posted by konqerror View Post



    Actually, it was a complete miss according to analyst estimates. The number thrown around was $5 Billion of Other = 5 Million Watches.



    So if we have a 50% increase, that's about $1.5 B of Apple Watches. Assume an average selling price of $400, that's 3.75 M Watches... Thats in the neighborhood of everybody's estimates, in line with Slice's 3 million US watches in 3 months. Long way to 30 Million...


     

     

    Who the **** said 30M in 3 months. Morons? The estimates were 12-20M by years end. Considering the watch isn't even on sale in most markets and the end of the year is the biggest season, I think they're pretty much on track for this.

  • Reply 13 of 19
    foggyhillfoggyhill Posts: 4,767member
    Quote:

    Originally Posted by jakeb View Post



    It's crazy how excited people get for any chance to claim that Apple is doomed.



    I'm not concerned for the company, but I do get concerned for the brand when I see so many people rooting for them to fail. What other companies get that kind of hate directed their way?

     

    Microsoft in the mid 1990s and IBM in the 1960-1970s. They did quite well a long time despite the hate from the techies.

  • Reply 14 of 19
    foggyhillfoggyhill Posts: 4,767member
    Quote:

    Originally Posted by iObserve View Post

     



    Excellent post.

     

    Don't forget, Apple also "defers revenue" of new products sold. In the case of iPhone it's 5-10%. This revenue for the watch wasn't even reported this quarter, it will be spread over the device's lifetime.

     

    Additionally, and this one is curiosity, during the period Apple made a recall of some Beats products. It is entirely possible they wrote it off under the "other" category as well. It wasn't disclosed how much a hit apple wrote off for the recall.

     

    All we can really glean from these numbers is that Apple at least sold over 1 billion worth of watches in its launch quarter, making the Apple Watch the most successful product launch in Apple's history.


     

    I think the watch sales cycle will be much close to the Iphone at least for the first 4-5 years because I've got a feeling the early sports ones will be passed on to other family members, or sold as people upgrade for new functionality. Initially, functionality will ramp up much more on the watch than for the Ipad.

  • Reply 15 of 19
    konqerrorkonqerror Posts: 685member
    Quote:

    Originally Posted by iObserve View Post

     

    Additionally, and this one is curiosity, during the period Apple made a recall of some Beats products. It is entirely possible they wrote it off under the "other" category as well. It wasn't disclosed how much a hit apple wrote off for the recall.


     

    Uh, you don't subtract a cost from revenue. You book it under an expense.

  • Reply 16 of 19
    konqerrorkonqerror Posts: 685member
    Quote:

    Originally Posted by NolaMacGuy View Post





    what 30 million??

     

    http://appleinsider.com/articles/15/04/13/strong-preorder-demand-for-apple-watch-could-signal-5m-sales-in-june-quarter-rbc-says

    Quote:


     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.


  • Reply 17 of 19
    iobserveiobserve Posts: 96member
    konqerror wrote: »
    Uh, you don't subtract a cost from revenue. You book it under an expense.
    Thank you, I didn't know that.

    That's interesting to me, so whenever Microsoft took that huge hit from Xbox warranty recall it records the loss under expenses but still reports positive revenue for the product category? Strange.

    Thanks again
  • Reply 18 of 19
    calicali Posts: 3,494member
    jakeb wrote: »
    It's crazy how excited people get for any chance to claim that Apple is doomed.

    I'm not concerned for the company, but I do get concerned for the brand when I see so many people rooting for them to fail. What other companies get that kind of hate directed their way?

    Nintendo.

    Except Nintendo doesn't know how to handle it like Apple. They give in to the criticism and trolls and pay greatly for it.
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