Kuo: Apple Watch shipments to decline in 2016 despite new models, lower prices

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in Apple Watch
Well-connected analyst Ming-Chi Kuo believes Apple Watch sales will decline in 2016 despite the launch of a revamped Apple Watch Series 2 and price cuts for the refreshed first-gen model, now called Apple Watch Series 1.









In a note to investors obtained by AppleInsider, Kuo cuts 2016 Apple Watch shipping estimates 15-25 percent for Apple's latest smartwatch lineup, which includes both Apple Watch Series 1 and Series 2 devices.



Specifically, the analyst is revising shipping estimates from 10 to 10.5 million units down to 8.5 to 9 million units for the entire Apple Watch line. By comparison, Apple shipped 10.4 million Apple Watch units during eight months of availability in 2015, Kuo says.



According to Kuo, Apple Watch faces four structural challenges: a lack of killer applications; inadequate battery life; heavy reliance on iPhone; and likelihood that multi-touch will not be the best UI solution for wearable devices. The last concern is peculiar considering Apple Watch has never supported multi-touch input, though Kuo might be referring to potential future iterations of the product.



"This suggests that sales of the new Apple Watch models are indeed driven by hardcore Apple (US) fans, first-generation replacement demand and niche demand, rather than by the mass market," Kuo writes, adding that collaborations with big retail brands, namely Nike and Hermes, are unlikely to pan out.



Though Apple made internal improvements debuted with Series 2, including a "swim-proof" chassis and the addition of advanced components like a faster processor and GPS radio, the overall aesthetic remains unchanged from last year's model.



Apple is competing in a highly competitive wearables market, one dominated by less capable devices marketed by the likes of Fitbit. Whereas Apple Watch is a multifunction smartwatch, wearable fitness products do very few things, but they do them well.



Fitbit, in particular, is taking a page out of Apple's book with its wearable lineup. The fitness trackers are designed for, and marketed to, the mass market.



"We believe Fitbit's products can be likened to the iPod for their minimalist key functionality and outstanding design," Kuo says.



In this scenario, Apple Watch is an analog of the early smartphone before iPhone disrupted the scene. Kuo backs up his thesis with numbers from an in-house survey that shows Fitbit thriving in the second half of 2016 and through 2017, figures that suggest no negative impact from Apple Watch.

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Comments

  • Reply 1 of 46
    slurpyslurpy Posts: 5,394member
    Eh, fuck you Kuo. Sick and tired of these dipshits talking out of their ass. 
    macxpressmwhiteration alcaliwatto_cobranetmagepeterhartjbdragonnolamacguyjcdinkins
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  • Reply 2 of 46
    EsquireCatsesquirecats Posts: 1,268member
    If it's driven by hardcore fans and not the mass market - then the device would see high replacement for 1st gen wearers. If it's driven by the mass market, then the device would see a spur by the relatively cheaper "series 1" watch. The reality is that it's going to be a mixture of both, which is why Apple released both - thus one should realistically see better than last year sales, and due to halo and trend growth: possibly even better than 1st year sales.
    Deelroncaliwatto_cobrapscooter63lolliverjony0
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  • Reply 3 of 46
    rob53rob53 Posts: 3,346member
    So he pushes Fitbit while badmouthing Apple Watch. Of course, there's nothing Apple or the SEC can do about his statements, although I'd love to see his paid investors go after his when he's wrong. This is the problem with investment, everybody guesses and nobody is held responsible for anything. Of course, AI could just as easily not give this guy any space of their website but they always do.
    calimac_doganantksundaramwatto_cobrafrumiouslolliver
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  • Reply 4 of 46
    freshmakerfreshmaker Posts: 532member
    Kind of surprising to see this prediction.  I'd expect Series 2 sales to be great.  The extra bit of water proofing and GPS were the only things lacking in the original, IMO.  Not sure it's necessarily worth upgrading from S0, but it's a great device for sure.  I love my S0 and the battery life is better than I was expecting
    anantksundaramwatto_cobralolliver
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  • Reply 5 of 46
    williamhwilliamh Posts: 1,048member
    I am agreeing with the Freshmaker.  I waited until it went on sale around Christmas and I'm very happy with my Apple Watch. I would expect good sales of the new one. Especially with watchOS 3, even the first one doesn't really lack anything I want. I don't have problems with the battery life. I don't have problems with the lack of GPS. And multitouch never occurred to me.
    jahbladewatto_cobranetmage
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  • Reply 6 of 46
    jungmarkjungmark Posts: 6,927member
    Interesting he doesn't talk about fitbit's shortcomings. 
    calianantksundaramlostkiwiGeorgeBMacjahbladewatto_cobrajbdragonpscooter63lolliver
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  • Reply 7 of 46
    tjwolftjwolf Posts: 424member
    Kuo may be well connected, but that doesn't mean he is always right - he's had his share of wrong predictions. I think this may very well be one of those cases: I've been trying to score a Series 2 in Apple stores since they became available - I'm 0 for 10, in two Apple stores in two states (NC and NJ).   To me it seems harder than for the original watch (been walking around with a cracked screen on my watch for the last 5 months, waiting for the new one :-(
    caliwatto_cobra
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  • Reply 8 of 46
    NY1822ny1822 Posts: 621member
    maybe this has to do with the fact that it already October and there is still a 3-4 week for shipment on most models....so it's a supply constraint and he comes up with reason why.

    these guys are obsessed with the aesthetic..."remains unchanged" unreal

    Top Holiday gift of 2016
    edited October 2016
    caliEsquireCatslostkiwijahbladewatto_cobra
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  • Reply 9 of 46
    NY1822ny1822 Posts: 621member
    Funny...
    Last year the 1st Generation Apple Watch was the top trending Holiday gift....

    https://www.google.com/amp/appleinsider.com/articles/15/11/18/ibm-watson-trend-pegs-apple-watch-as-hottest-holiday-gift/amp/?client=safari

    Majority of owners plan to give one as a gift

    http://mobile.reuters.com/article/idUSKBN0TR20F20151208#bs2IfxXUzmqTlgbU.97
    edited October 2016
    EsquireCatsjahbladewatto_cobralolliver
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  • Reply 10 of 46
    disneylandmandisneylandman Posts: 297member
    Take a look around and face reality.  Not many people care to buy or wear an Apple Watch, compared to the millions that use an iPhone.  The smart watch category is a niche market and the masses choose not to buy one.  That is just the way it is, and Kuo is pretty much on target with the Apple market.  The Apple Watch is lumped in with iPods and AppleTVs because it is nothing more than an accessory product.  So Apple never has to release the numbers because it is combined with other accessory sales.  Smart move on Apple's part for the financial statement.
    Syntaxkita
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  • Reply 11 of 46
    slurpyslurpy Posts: 5,394member
    On another note..

    http://www.theverge.com/circuitbreaker/2016/10/3/13152590/microsoft-band-discontinued

    Yeah. Basically every other smart watch is shitting the bed. The Apple Watch will be the only one left standing. 
    calilostkiwimacxpresswatto_cobranetmagenolamacguypscooter63lolliver
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  • Reply 12 of 46
    adrayvenadrayven Posts: 460member
    Kuo is selling short. Thats why they will decline..
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  • Reply 13 of 46
    EsquireCatsesquirecats Posts: 1,268member
    disneylandman said:
    Take a look around and face reality.  Not many people care to buy or wear an Apple Watch, compared to the millions that use an iPhone.  The smart watch category is a niche market and the masses choose not to buy one.  That is just the way it is, and Kuo is pretty much on target with the Apple market.  The Apple Watch is lumped in with iPods and AppleTVs because it is nothing more than an accessory product.  So Apple never has to release the numbers because it is combined with other accessory sales.  Smart move on Apple's part for the financial statement.
    We could use your anecdote - or we could just visit apple.com and look at shipping dates which have always been a reliable source of demand. We are several weeks post launch and there are still no Series 2 model available for immediate delivery - all Series 2 variants have a several week wait time, despite Apple *significantly* cutting down on launch options from last year.
    watto_cobranetmagelolliver
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  • Reply 14 of 46
    calicali Posts: 3,494member
    How many people were waiting in line for the Apple Watch Series 2? It was all iPhone 7 hype. Maybe launch sales were good but when Apple announced no more iPhone 7 Plus models were available half of the lines left.
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  • Reply 15 of 46
    anantksundaramanantksundaram Posts: 20,413member
    Kuo clearly has some type of an ax to grind with Apple. He just seems to throw some contrarian stuff out there to get attention. 

    At at this rate, he's not going to be very "well-connected" for much longer.
    watto_cobrapalominepscooter63lolliver
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  • Reply 16 of 46
    thrangthrang Posts: 1,051member
    Whatever. All I know is I see more and more Apple Watches in the wild every month, and I'm certain this was always viewed by Apple as a slow long burn that accelerates over time. What most don't understand is the "killer app" is the Apple ecosystem itself.
    edited October 2016
    watto_cobraTempletonnetmagepalominepscooter63lolliver
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  • Reply 17 of 46
    Templetontempleton Posts: 84member
    Who is tnis guy! And what does " well connected" mean? I'd drop him like a hot potato
    watto_cobra
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  • Reply 18 of 46
    mr4jsmr4js Posts: 55member
    Well-connected Butthead is more like it. How does garbage like this get published?
    watto_cobra
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  • Reply 19 of 46
    slurpyslurpy Posts: 5,394member
    thrang said:
    Whatever. All I know is I see more and more Apple Watches in the wild every month, and I'm certain this was always viewed by Apple as a slow long burn that accelerates over time. What most don't understand is the "killer app" is the Apple ecosystem itself.
    I was at Disney World last week and I swear that it seemed like 25% of everyone there was wearing an Apple Watch. It was insane, I must have seen thousands. No way in hell this product is doing poorly, by any definition of the word. 
    EsquireCatswatto_cobraTempletonbadmonkpscooter63lolliver
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  • Reply 20 of 46
    jgreg728jgreg728 Posts: 118member
    thrang said:
    Whatever. All I know is I see more and more Apple Watches in the wild every month, and I'm certain this was always viewed by Apple as a slow long burn that accelerates over time. What most don't understand is the "killer app" is the Apple ecosystem itself.
    Agreed. Especially the sport models. Although I have seen a guy at my local gym bring a stainless steel one there with the elastomer band! But yeah I'm definitely seeing them in the wild more and more as time goes on. We'll see how this does. Personally, I'm still waiting for them to thin the casing a bit and add LTE. Although the S2 IS a tempting buy....
    watto_cobra
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