Apple Watch's first-weekend sales will be interesting, but ultimately unimportant

Posted:
in Apple Watch edited April 2015
With less a week left on the calendar before Apple opens preorders for its hotly-anticipated Watch, industry analysts have begun to weigh in with their predictions for opening weekend sales figures. While these numbers are sure to be interesting -- just as they are for the iPhone -- they likely won't mean much for the Watch's future.


The windows of Selfridges in London are covered in Apple Watch promos. | Via @msquinn


Apple's recent history is littered with staggering first-weekend sales for its new devices. More than 5 million iPhone 5 units were moved in its first three days of availability; the 6 and 6 Plus doubled that.

Many people expect similar success for the Watch, the first all-new Apple product developed under Tim Cook and the company's first foray into wearable technology. Others, like Piper Jaffray analyst Gene Munster, take a more pessimistic view.

No matter if Watch tracks the bull or the bear -- or somewhere in between -- the figures will doubtlessly provide enough material to fill thousands of virtual column inches, but they won't mean much in the long term. Opening sales are hardly indicative of a category's long-term prospects.

Apple has shown a willingness to start small and wait markets out, as evidenced by the progression of the iPhone. Just 270,000 first-generation iPhones were shipped in the opening 48 hours of sales.

This prompted Apple to slash the 8-gigabyte iPhone's price from $599 -- it was initially unsubsidized by exclusive carrier AT&T -- to just $399 three months after its debut. Apple sunsetted the less popular 4-gigabyte model, selling remaining stock for only $299.
Opening sales are hardly indicative of a category's long-term prospects.
The second-generation iPhone 3G bumped its debut number to 1 million; sales topped 4 million with the iPhone 4S, and the rest is history.

The Apple TV has followed a similar, if less dramatic, trajectory. It took 7 years for Apple's favorite hobby to reach the 10 million unit plateau.

Today, without a hardware change in more than 3 years, the Apple TV commands almost 20 percent of the market for streaming content devices.

"The kind of investors we seek are long term because that's how we make our decisions," Apple CEO Tim Cook said in a recent interview. "If you're a short-term investor, obviously you've got the right to buy the stock and trade it the way you want. It's your decision. But I want everybody to know that's not how we run the company."

The iPhone was a long-term bet on the rise of mobile devices to augment and replace PCs; it now dominates the balance sheet of the world's largest company. The Apple TV was a long-term bet on the rise of cord-cutting and streaming media; it's now a point of entry for Apple to tens of millions of living rooms across the world.

The company will almost certainly take a similar view of the Watch. It may or may not amount to much in its first weekend, but it signals a long-term commitment to wearable technology -- clearly the next frontier in mobility, and likely to be another profitable one for Apple.
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Comments

  • Reply 1 of 166
    danielswdanielsw Posts: 905member
    It certainly didn't happen overnight, but the wristwatch inexorably replaced the pocket watch as being more convenient. Then it gradually became more durable, more accurate, more "automatic", and more "complicated."

    The ? Watch is the "smartwatch" done right, as Apple is wont to do. This is only the beginning, and we longterm investors/customers will help shape it.
  • Reply 2 of 166
    brlawyerbrlawyer Posts: 828member
    This article seems like hedging AI against an initial adrenaline rush sale and then ultimate failure in the long term...after all, relying on an iPhone to fully work, having a terrible battery life as well as a bad design are not very positive signs, right?
  • Reply 3 of 166
    spodspod Posts: 25member
    I think it's symbolic of man's inhumanity to man.
  • Reply 4 of 166
    richlrichl Posts: 2,213member

    I expect it to follow a similar trajectory to the iPad, both in the short and long term.

  • Reply 5 of 166
    asciiascii Posts: 5,941member

    I expect the reception to be only lukewarm. But regardless, as the article says, it was the right move for the long term, because in the long term wearables will take over from pocket phones.

  • Reply 6 of 166
    tmaytmay Posts: 3,646member
    Quote:
    Originally Posted by ascii View Post

     

    I expect the reception to be only lukewarm. But regardless, as the article says, it was the right move for the long term, because in the long term wearables will take over from pocket phones.


    I would see online sales as being pretty typical for the sport version; sold out but not as fast as a typical iPhone launch. Still, some people will buy the stainless steel model online, though I personally would want to see that in a retail environment first. (I will be pre-ordering the sport watch with the green band Friday morning).

     

    There will be a lot of curiosity at the retail level but prevalent buyer hesitancy. For the most part, these potential buyers will find the Apple Watch an important add-on to the iPhone, but will take a wait and see approach near term.

     

    I don't think Apple will have any trouble selling the Edition, but retailing on that will by definition create a slow ramp.

     

    All in all, pretty much what would be expected of a new product line for Apple. The market suggests that 20m would be good sales for the first year; I expect that Apple will hit that target.

  • Reply 7 of 166
    MarvinMarvin Posts: 14,213moderator
    ascii wrote: »
    in the long term wearables will take over from pocket phones.

    It depends on the wearable but watches won't replace phones. You can see a more standalone watch in the Galaxy Gear S, skip to 11:00 to see browsing and gaming:


    [VIDEO]


    It's far too small and you can't hold your wrist up like that for long periods of time, it would have to be on the underside of your wrist like some of the sports bands. Gaming and browsing are the highest usage cases for the phone. The battery life is far too short and the screen is too small to do long activities like these.

    Smartwatches are accessories to phones. Apple is going to categorize them with accessories in their financials.

    For the Apple Watch, there's a pretty low bar for success here, if they sell at an average of $450, to be a $1b revenue product, they only have to sell just over 2 million units for the whole year. I wouldn't say watches are impulse buys either because unlike a phone, they aren't an essential carry item. Even a preorder of 500k units would be a good result.
  • Reply 8 of 166
    phone-ui-guyphone-ui-guy Posts: 1,018member
    I think Apple will sell more than they expect and only tell us general demand language. Since they moved the watch earnings to their general bucket, we won't be getting numbers.

    They don't want anyone to know how many they sell for competitive reasons.
  • Reply 9 of 166
    shenshen Posts: 434member
    brlawyer wrote: »
    This article seems like hedging AI against an initial adrenaline rush sale and then ultimate failure in the long term...after all, relying on an iPhone to fully work, having a terrible battery life as well as a bad design are not very positive signs, right?

    That is pure comedy... well, not gold. Silver maybe? I love that you post something that is literally the exact opposite of the articles statement as "what it seems to be saying."

    There is probably a lawyer joke about reading comprehension in there somewhere.

    You need to promise you will never stop posting. I only read the comments for your comedy. Please, when the watch is setting sales records over the next year, just keep posting your drivel. Double down on the stupid. Keep up the dumb fight. You guys are part of mine morning reading along with comics like SMBC, and you get me through the day. Never stop...
  • Reply 10 of 166
    blazarblazar Posts: 270member
    Clickbait! I lost...
  • Reply 11 of 166
    To this day I am amazed how people think that first weekend sales are a mystery.

    Apple knows exactly how many its going to sell down to the nearest 100K. They know how much supply to build the first weekend, how many pre-orders to announce to give Wall Street a boner and how much hand wringing to generate in the Apple press.
  • Reply 12 of 166
    nolamacguynolamacguy Posts: 4,758member
    brlawyer wrote: »
    This article seems like hedging AI against an initial adrenaline rush sale and then ultimate failure in the long term...after all, relying on an iPhone to fully work, having a terrible battery life as well as a bad design are not very positive signs, right?

    Without BF you have nobody to Like your drivel any more. Sad, huh?
  • Reply 13 of 166
    Quote:
    Originally Posted by brlawyer View Post



    This article seems like hedging AI against an initial adrenaline rush sale and then ultimate failure in the long term...after all, relying on an iPhone to fully work, having a terrible battery life as well as a bad design are not very positive signs, right?



    The article does seem like an exercise in lowering expectations. Not unexpected, but interesting nonetheless. 

  • Reply 14 of 166
    jerry602jerry602 Posts: 36member
    I'm expecting the watch to be more of a "viral product" like the original phone. I got the original iPhone on opening weekend, and was the only one of my friends to have it. They didn't see the need or point, but were still curious and wanted to use mine. When the next generation came out, and was subsidized (as future LTE models may very well be) many of them jumped on the bandwagon. This will be one of those products that your friends and acquaintances will recognize and want to see and play with before getting their own.
  • Reply 15 of 166
    mac voyermac voyer Posts: 1,283member

    I also think initial sales will not be representative of demand, but for different reasons. With this product, you actually have to make an appointment to purchase it. At no time in the foreseeable future will you be able to just walk in, buy the one you want, and get out. That will create a major bottleneck in the sales process. I suspect there will be virtual lines for weeks just to satisfy what otherwise would have been the first weekend's demand.

  • Reply 16 of 166
    mauijoemauijoe Posts: 77member
    The hard part for me will be holding out for the second gen model, but that's my plan. If lots of people are thinking the same it good be a good sign for the long term prospects of the device.
  • Reply 17 of 166
    jerry602jerry602 Posts: 36member
    mac voyer wrote: »
    I also think initial sales will not be representative of demand, but for different reasons. With this product, you actually have to make an appointment to purchase it. At no time in the foreseeable future will you be able to just walk in, buy the one you want, and get out. That will create a major bottleneck in the sales process. I suspect there will be virtual lines for weeks just to satisfy what otherwise would have been the first weekend's demand.

    Very true...it can be ordered online, but this is something that is worn so most people will want to try them on first...
  • Reply 18 of 166
    anantksundaramanantksundaram Posts: 19,106member
    "Less than two weeks?" Pre-order is less than six days away.
  • Reply 19 of 166
    jerry602jerry602 Posts: 36member
    Not to mention the size factor...many guys like me don't have very big wrists and look stupid wearing big watches. So I'll pre-order the 38mm and hope I can squeeze in an appointment to try them before mine ships, but it's a little bit of anxiety buying something so expensive if you're not sure how it's going to look on you first.
  • Reply 20 of 166
    anantksundaramanantksundaram Posts: 19,106member
    I am predicting at least a million, possibly as high as two, before the end of the first weekend. And a sellout of the Watch and Watch Edition models by 3PM Pacific.
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