I like most of your comment but the ASP is not likely to be anywhere close to $750. You have to know Sport is the most commonly sold model, right? Using estimates on the low end I'll say that out of 12 Sports models sold 1 is a SS model, and out of 1200 SS models sold 1 is the Edition model.
Edition: 1 × $13,500* = $13,500 ASP for the Edition models Watch: 1,200 × $776.50** = $931,800 ASP for the Watch models Sport: 14,000 × $386.50*** = $5,411,000 ASP for the Sport models
- - -
$5,411,000 + $931,800 + $13,500 = $6,356,300 ÷ 15,201 = $418.15 ASP
Feel free to check my maths, as well as alter assumed unknowns and placeholders, but if you do please state some sort of reasoning for, example, why you think that Edition likely sells one model for ever 100 SS Watch's sold, not 1,200.
* With no real info to go on I calculated the Edition ASP based on calculating the mean and median price. Both come out to $13,500.
** With no real info to go on I calculated the Watch ASP based on calculating the mean and median price. The mean is $764 and the median is $824 I think took the mean average of those to get $794. I then assumed, based on anecdotes, that the 42mm model outsells the 38mm for the same styling so I will calculated that $50 per unit to happen 25% more. That comes out to $819.
*** With no real info to go on I calculated the Sport ASP based on calculating the mean and median price. Both come out to $374. I then assumed, based on anecdotes, that the 42mm model outsells the 38mm for the same styling so I will calculated that $50 per unit to happen 25% more. That comes out to $386.50.
You're ignoring Watch band sales. Sure, it may not get to $750 ASP, but it's likely closer to his numbers than yours.
I know it's not the point of the article, but imagine making a business deal where you have to sell 2m units per month just to break even. Their margins must be razor thin
Excuse me? Who said anything about them having to "sell 2m units per month"? The deal would be for them to PRODUCE them - and apparently they can't: Ergo, this is a production bottleneck, not a demand problem. That's what's so screwy about the WSJ article.
Look: Who cares if they have an issue increasing production. It's not like there are worthy competitors out there waiting to take advantage. Nobody can build a watch that can even come close to the Watch. The worst that can be said is that Apple won't make as much money this holiday season as they might have been able to otherwise. So? Nobody seems to care that much about how much money Apple is making anyway. Otherwise the stock would be worth twice what it is.
Come back and let us know (1) when they do; and (2) when you have some (reasonable) sales estimates.
In the meantime, let's stick to the real world.
What a strange response.
Breitling, Tag Heuer, Guess and Bulgari are some of the traditional watchmakers melding traditional (or unique) designs with smartwatch functions and connectivity. I think you might be a Breitling kind of guy but I could of course have the wrong impression of you. Based on your recent replies to my posts that's certainly a possibility.
Everyone has 2 chargers -- one in their bedroom one downstairs (same with iPhone/iPad chargers) -- avoids fights!
1) So what is your household's ASP? It looks to be around $300 more than what I calculated.
2) I am surprised that over 80% are the 38mm Watches and that you have so many extra bands, an extra charger.
It just doesn't get any easier than paying with your Apple Watch!
I have yet to do this successfully, but that might be because of wOS 2.0.
PS: Are the chargers with the metal on them have a more powerful magnet than the plastic ones that come with the Sport model or are sold as an accessory? My biggest issue is just how easily it pops off the charger.
Yeah, a lot of stuff doesn't work with Watch OS 2.0. That's why I have a separate Watch for development.
As to the chargers, IDK personally, but I haven't heard any complaints from the others.
I usually have the charger on the table or nightstand -- with the long cord dangling. With the Milanese Loop band, I pull it all the way closed, so it encapsulates the charger pod -- then attach the magnetic end of the band, on the band exposed nearest the casing. This prevents any pop out!
I really like the Milanese band ... except for one thing -- the magnet at the end tends to automatically fold over and attach itself to the first 3/4 inch (closest to the end) of the band. I am surprised that Apple didn't engineer this band so the first inch, or so, from the end is not magnetic. But ... That's something that Steve Jobs would've done -- like how batteries are placed in an Apple Wireless Mouse ...
Breitling, Tag Heuer, Guess and Bulgari are some of the traditional watchmakers melding traditional (or unique) designs with smartwatch functions and connectivity. I think you might be a Breitling kind of guy but I could of course have the wrong impression of you. Based on your recent replies to my posts that's certainly a possibility.
The only thing 'strange' is impressions you form of people on the Internet, whom you've never met.
Like I said, please come back and let us know when all these fancy names have their version of smartwatches, and when you have some sense of how they're doing out in the actual wild.
so ASE break even is 24 Million watches annual, for an entirely new product? Not only were ASE overly ambitious, i doubt they will remain a supplier leaking out info like this
The supplier reported earnings data just like Apple does every quarter. They did their duty to their stockholders as a publicly traded company. When they miss their projections they have to justify why it happened, there's no "leaking" of information here.
You're ignoring Watch band sales. Sure, it may not get to $750 ASP, but it's likely closer to his numbers than yours.
Yes, I purposely didn't include accessories. If you want to make a more complicated estimate using watch bands, chargers, AC+, please do so. You may even want to check with 3rd-party vendors to get an estimate as to what type of revenue Apple Watch generates for the entire market.
What I don't want to see are numbers thrown out with any effort whatsoever to do the maths. For example, to be closer to his numbers than to mine (even though I clearly didn't include watch bands) it would have to exceed $584.25 per unit. I have no reason to believe that even with straight sales or with all accessories and add-ins (not just extra bands) that it can't be over that value, you just need to do the work. You could also get there by arguing that Apple wouldn't have made Edition if their revenue was only going to $13k for every $6 MM sold in the other category, and then estimate that Edition sales probably should be about 10% of the revenue, not 0.5%, which is about why my numbers come out to. The same for the SS models, only 25% in revenue compared to Sport could easily be argued as too low for the market segment.
I'm in between. On the one hand I do not recall Apple to have stated BS in a quarterly call and I I believe when they say it did well that it did well. And not because of artificially low internal expectations but because it really did well. Also, not disclosing the specific numbers reminds me of the ATV where they did not do this for some time as well and left it under the "protective umbrella" of "other sales". On the other hand this is exactly where I'm frowning upon. The ATV was declared a hobby multiple times (even if it wasn't.). The watch was introduced with much fanfare and lots of marketing to establish this luxury category product. And as was mentioned here before, I don't buy it that they don't want to have the competition k ow how well it did. In the end what could the competition do with such kind of information?
For the time being the only explanation ruin I can come up with is that because they hire a lot of people who can give realistic estimates and projections the sales are indeed healthy and above their expectations but that for any analyst or pseudo professional expert the sales are abysmal. So they will wait with disclosing the numbers until it's "wow" all around. Maybe.
Apple doesn't want the competition to have ANY market data; some of those little details gleaned now will show up in the next generation Apple Watch as features and improvements.
Why give your competitors, who have quite a bit of history as followers, any advantage at all? I would guess that Apple will be more forthcoming when they less about Apple Watch marketing data than the benefits of publishing sales data.
For the record, I bought a sport watch last week, and I'm primarily using it as a phone Dick Tracy style, giving me more productivity by not having to fish my iPhone out of my back pocket. A big deal to me as I'm running parts in CNC machines and my hands are typically wet with coolant. YMMV.
I like most of your comment but the ASP is not likely to be anywhere close to $750. You have to know Sport is the most commonly sold model, right? Using estimates on the low end I'll say that out of 12 Sports models sold 1 is a SS model, and out of 1200 SS models sold 1 is the Edition model.
Well, see, neither of us knows. I actually believe that the ratio of Stainless models to sports models is far higher than you make out. Among the people I know who've bought one/are buying one, ASP is around €800.
Thing is, we don't know - and neither do the Swiss. We don't know what the market looks like, and the Swiss don't know whom they're developing at to counter Apple.
And Apple wants to keep it that way.
(I'm glad you mostly agree with the rest of my post.)
The supplier reported earnings data just like Apple does every quarter. They did their duty to their stockholders as a publicly traded company. When they miss their projections they have to justify why it happened, there's no "leaking" of information here.
I don't think that any reasonable person would expect 24 million calendar years sales after the Apple Watch initial release. Either the company is in this for the long haul at the 2 million/month break even, or they totally whiffed their manufacturing cost estimates for a more conservative production rate that they actually see. We don't have a clue on why they missed their projections.
The only thing 'strange' is impressions you form of people on the Internet, whom you've never met.
Like I said, please come back and let us know when all these fancy names have their version of smartwatches, and when you have some sense of how they're doing out in the actual wild.
(Fixed typos).
And what would that matter to the post I made? I noted some of the traditional Swiss watchmakers are taking a different tack with connected features and styling than the techs are, IMHO something that may make a lot of sense to buyers. You came back with a response that took issue with that but talking about what the sales numbers are as tho it shouldn't even be considered until sales numbers are known HUH? If you wanted to discuss what I wrote I would have expected you to comment on what I actually said.
What do you think of watchmakers limiting the functions to let the style and battery life take priority over "computer on a wrist" ideas. Do you think such devices might match well with a segment of tech aware watch wearers, particularly the fashion-conscious and/or well-heeled? If not, why not?
Come back and let us know (1) when they do; and (2) when you have some (reasonable) sales estimates.
In the meantime, let's stick to the real world.
I agree that your response is strange because it doesn't address his post and seems pointlessly antagonist.
Do you deny that they are working on their own competitors to Apple Watch? I assume they are and I assume it will be a huge issue for them. They can't compete with Apple in many regards and even though the collector side of the watch market is probably fairing well, there probably are seeing some downturn in midrange sales.
I also agree with [@]Gatorguy[/@] that only adding some basic smart watch features is probably the best way to maintain their look and feel while making their products more modern. I think longterm this could have have some dire issues, but that all depends on how well Apple Watch does in the coming years, and these dire results are no different than they would experience by doing nothing at all or trying to create their own smart watches from scratch.
Finally, he posted a relevant link that is interesting. He does this a lot, and not just stories that could be deemed anti-Apple. For example, he posted about an article to that massive Android hole a day or two before AI did.
Well, see, neither of us knows. I actually believe that the ratio of Stainless models to sports models is far higher than you make out. Among the people I know who've bought one/are buying one, ASP is around €800.
Thing is, we don't know - and neither do the Swiss. We don't know what the market looks like, and the Swiss don't know whom they're developing at to counter Apple.
And Apple wants to keep it that way.
(I'm glad you mostly agree with the rest of my post.)
That's why I included details as to how I derived my numbers. This sets a clear line between wild ass guess and a concerted effort to find something real. My hope was that you would take the baton, not just throw out an ASP.
And what would that matter to the post I made? I noted some of the traditional Swiss watchmakers are taking a different tack with connected features and styling than the techs are, IMHO something that may make a lot of sense to buyers. You came back with a response that took issue with that but talking about what the sales numbers are as tho it shouldn't even be considered until sales numbers are known HUH? If you wanted to discuss what I wrote I would have expected you to comment on what I actually said.
What do you think of watchmakers limiting the functions to let the style and battery life take priority over "computer on a wrist" ideas. Do you think such devices might match well with a segment of tech aware watch wearers, particularly the fashion-conscious and/or well-heeled? If not, why not?
Ok, in case the sarcasm in my response wasn't obvious: I think it's a move will fail. It'll be the equivalent of Microsoft creating a tablet that is a laptop that is a toaster or whatever.
I don't think that any reasonable person would expect 24 million calendar years sales after the Apple Watch initial release. Either the company is in this for the long haul at the 2 million/month break even, or they totally whiffed their manufacturing cost estimates for a more conservative production rate that they actually see. We don't have a clue on why they missed their projections.
there is starting costs, that for such a complex sub assembly, are pretty high in regards to the fixed cost. Especially with Apple requirements where anything less than perfect will be rejected, so yeld is probably low in the beginning. They may have not break even yet, but in the long haul, they will. Apple prepay most of the capital expenditure, but it is unlikely they cover yields too.
More, if they manufactured 2M, and because there is probably at least another supplier ( In their shoes I would go with more than one), it is far from meaning the sales are low. The WSJ article is just a typical FUD piece by clueless anal-ysts.
The supplier reported earnings data just like Apple does every quarter. They did their duty to their stockholders as a publicly traded company. When they miss their projections they have to justify why it happened, there's no "leaking" of information here.
I don't think that any reasonable person would expect 24 million calendar years sales after the Apple Watch initial release. Either the company is in this for the long haul at the 2 million/month break even, or they totally whiffed their manufacturing cost estimates for a more conservative production rate that they actually see. We don't have a clue on why they missed their projections.
The way I read the WSJ article, they purposefully concatenated a production issue and a demand issue. The Watch is not having a demand issue. It's having a production issue. But since the Watch has no competition, so what? This is a rather obvious attempt on the part of the WSJ to manufacture an issue out of whole cloth.
I agree that shareholders shouldn't be concerned about Watch numbers at the moment. That said, Apple hyped the Watch so much that it's understandable that shareholders, and even the general public, are interested in numbers. A lot of people were expecting a big hit, maybe not iPhone big, but big nonetheless. I'm curious why you think the category is worth pursuing, though? I don't think smart watches will ever be a mainstream product category. Wearables as a category seems rather gimmicky to me until sensor technology improves in a big way. And even then, I don't imagine interacting with the wearable, but rather wearing a discreet little pin or ring or something with a variety of health-related sensors that feed data to my phone or the cloud.
I also don't think the iPod is remotely comparable to the Watch. Portable music players were already a huge business. Granted, they were mostly CD and tape-based. A few companies had created hard drive-based players and Apple saw an opportunity and delivered a far better product and experience. You make it sound like Apple created this whole new market and people eventually warmed to it. That's not true. SONY was selling millions upon millions of Walkman players and had been for years. Apple delivered the right product at the right time as the market transitioned to digital files from physical media. And it was a HUGE hit. But the consumer was already well accustomed to carrying his or her music around. The Watch market is nothing like that.
So, Apple enters a market where they have the ability to innovate, they do a proper marketing strategy, and the media provides lots of hype, and as a fact disappointment, but you don't think that the category is worth pursuing, based on the initial first months of sales?
Elon is doing the exact same thing with Tesla, and there are still many naysayers, but it will be easy to prove him right; all he has to do is start large scale manufacturing of batteries and the path to the future for automobiles is electric.
Apple too can afford to develop the market for this, even over years.
Ok, in case the sarcasm in my response wasn't obvious: I think it's a move will fail. It'll be the equivalent of Microsoft creating a tablet that is a laptop that is a toaster or whatever.
(This response is for SolipsismY too!)
1) Yeah, I didn't catch any sarcasm.
2) I agree that something will fail, and that it's most likely the Swiss watch makers. Not that luxury and collector watches will die, or that cheap watches from China in the 100s of millions won't still be commonplace, but that the bulk of the revenue and profits will likely be had by Apple within in 5-10 years, no matter what they do.
Comments
You're ignoring Watch band sales. Sure, it may not get to $750 ASP, but it's likely closer to his numbers than yours.
http://syndicate.details.com/post/intuitive-analog-inspired-smartwatches-by-vector-watch
Look: Who cares if they have an issue increasing production. It's not like there are worthy competitors out there waiting to take advantage. Nobody can build a watch that can even come close to the Watch. The worst that can be said is that Apple won't make as much money this holiday season as they might have been able to otherwise. So? Nobody seems to care that much about how much money Apple is making anyway. Otherwise the stock would be worth twice what it is.
Yeah, sure.
Come back and let us know (1) when they do; and (2) when you have some (reasonable) sales estimates.
In the meantime, let's stick to the real world.
Breitling, Tag Heuer, Guess and Bulgari are some of the traditional watchmakers melding traditional (or unique) designs with smartwatch functions and connectivity. I think you might be a Breitling kind of guy but I could of course have the wrong impression of you. Based on your recent replies to my posts that's certainly a possibility.
Yeah, a lot of stuff doesn't work with Watch OS 2.0. That's why I have a separate Watch for development.
As to the chargers, IDK personally, but I haven't heard any complaints from the others.
I usually have the charger on the table or nightstand -- with the long cord dangling. With the Milanese Loop band, I pull it all the way closed, so it encapsulates the charger pod -- then attach the magnetic end of the band, on the band exposed nearest the casing. This prevents any pop out!
I really like the Milanese band ... except for one thing -- the magnet at the end tends to automatically fold over and attach itself to the first 3/4 inch (closest to the end) of the band. I am surprised that Apple didn't engineer this band so the first inch, or so, from the end is not magnetic. But ... That's something that Steve Jobs would've done -- like how batteries are placed in an Apple Wireless Mouse ...
The only thing 'strange' is impressions you form of people on the Internet, whom you've never met.
Like I said, please come back and let us know when all these fancy names have their version of smartwatches, and when you have some sense of how they're doing out in the actual wild.
(Fixed typos).
Yes, I purposely didn't include accessories. If you want to make a more complicated estimate using watch bands, chargers, AC+, please do so. You may even want to check with 3rd-party vendors to get an estimate as to what type of revenue Apple Watch generates for the entire market.
What I don't want to see are numbers thrown out with any effort whatsoever to do the maths. For example, to be closer to his numbers than to mine (even though I clearly didn't include watch bands) it would have to exceed $584.25 per unit. I have no reason to believe that even with straight sales or with all accessories and add-ins (not just extra bands) that it can't be over that value, you just need to do the work. You could also get there by arguing that Apple wouldn't have made Edition if their revenue was only going to $13k for every $6 MM sold in the other category, and then estimate that Edition sales probably should be about 10% of the revenue, not 0.5%, which is about why my numbers come out to. The same for the SS models, only 25% in revenue compared to Sport could easily be argued as too low for the market segment.
I'm in between. On the one hand I do not recall Apple to have stated BS in a quarterly call and I I believe when they say it did well that it did well. And not because of artificially low internal expectations but because it really did well. Also, not disclosing the specific numbers reminds me of the ATV where they did not do this for some time as well and left it under the "protective umbrella" of "other sales". On the other hand this is exactly where I'm frowning upon. The ATV was declared a hobby multiple times (even if it wasn't.). The watch was introduced with much fanfare and lots of marketing to establish this luxury category product. And as was mentioned here before, I don't buy it that they don't want to have the competition k ow how well it did. In the end what could the competition do with such kind of information?
For the time being the only explanation ruin I can come up with is that because they hire a lot of people who can give realistic estimates and projections the sales are indeed healthy and above their expectations but that for any analyst or pseudo professional expert the sales are abysmal. So they will wait with disclosing the numbers until it's "wow" all around. Maybe.
Apple doesn't want the competition to have ANY market data; some of those little details gleaned now will show up in the next generation Apple Watch as features and improvements.
Why give your competitors, who have quite a bit of history as followers, any advantage at all? I would guess that Apple will be more forthcoming when they less about Apple Watch marketing data than the benefits of publishing sales data.
For the record, I bought a sport watch last week, and I'm primarily using it as a phone Dick Tracy style, giving me more productivity by not having to fish my iPhone out of my back pocket. A big deal to me as I'm running parts in CNC machines and my hands are typically wet with coolant. YMMV.
Well, see, neither of us knows. I actually believe that the ratio of Stainless models to sports models is far higher than you make out. Among the people I know who've bought one/are buying one, ASP is around €800.
Thing is, we don't know - and neither do the Swiss. We don't know what the market looks like, and the Swiss don't know whom they're developing at to counter Apple.
And Apple wants to keep it that way.
(I'm glad you mostly agree with the rest of my post.)
The supplier reported earnings data just like Apple does every quarter. They did their duty to their stockholders as a publicly traded company. When they miss their projections they have to justify why it happened, there's no "leaking" of information here.
I don't think that any reasonable person would expect 24 million calendar years sales after the Apple Watch initial release. Either the company is in this for the long haul at the 2 million/month break even, or they totally whiffed their manufacturing cost estimates for a more conservative production rate that they actually see. We don't have a clue on why they missed their projections.
What do you think of watchmakers limiting the functions to let the style and battery life take priority over "computer on a wrist" ideas. Do you think such devices might match well with a segment of tech aware watch wearers, particularly the fashion-conscious and/or well-heeled? If not, why not?
I agree that your response is strange because it doesn't address his post and seems pointlessly antagonist.
Do you deny that they are working on their own competitors to Apple Watch? I assume they are and I assume it will be a huge issue for them. They can't compete with Apple in many regards and even though the collector side of the watch market is probably fairing well, there probably are seeing some downturn in midrange sales.
I also agree with [@]Gatorguy[/@] that only adding some basic smart watch features is probably the best way to maintain their look and feel while making their products more modern. I think longterm this could have have some dire issues, but that all depends on how well Apple Watch does in the coming years, and these dire results are no different than they would experience by doing nothing at all or trying to create their own smart watches from scratch.
Finally, he posted a relevant link that is interesting. He does this a lot, and not just stories that could be deemed anti-Apple. For example, he posted about an article to that massive Android hole a day or two before AI did.
That's why I included details as to how I derived my numbers. This sets a clear line between wild ass guess and a concerted effort to find something real. My hope was that you would take the baton, not just throw out an ASP.
Ok, in case the sarcasm in my response wasn't obvious: I think it's a move will fail. It'll be the equivalent of Microsoft creating a tablet that is a laptop that is a toaster or whatever.
(This response is for SolipsismY too!)
I don't think that any reasonable person would expect 24 million calendar years sales after the Apple Watch initial release. Either the company is in this for the long haul at the 2 million/month break even, or they totally whiffed their manufacturing cost estimates for a more conservative production rate that they actually see. We don't have a clue on why they missed their projections.
there is starting costs, that for such a complex sub assembly, are pretty high in regards to the fixed cost. Especially with Apple requirements where anything less than perfect will be rejected, so yeld is probably low in the beginning. They may have not break even yet, but in the long haul, they will. Apple prepay most of the capital expenditure, but it is unlikely they cover yields too.
More, if they manufactured 2M, and because there is probably at least another supplier ( In their shoes I would go with more than one), it is far from meaning the sales are low. The WSJ article is just a typical FUD piece by clueless anal-ysts.
The way I read the WSJ article, they purposefully concatenated a production issue and a demand issue. The Watch is not having a demand issue. It's having a production issue. But since the Watch has no competition, so what? This is a rather obvious attempt on the part of the WSJ to manufacture an issue out of whole cloth.
I agree that shareholders shouldn't be concerned about Watch numbers at the moment. That said, Apple hyped the Watch so much that it's understandable that shareholders, and even the general public, are interested in numbers. A lot of people were expecting a big hit, maybe not iPhone big, but big nonetheless. I'm curious why you think the category is worth pursuing, though? I don't think smart watches will ever be a mainstream product category. Wearables as a category seems rather gimmicky to me until sensor technology improves in a big way. And even then, I don't imagine interacting with the wearable, but rather wearing a discreet little pin or ring or something with a variety of health-related sensors that feed data to my phone or the cloud.
I also don't think the iPod is remotely comparable to the Watch. Portable music players were already a huge business. Granted, they were mostly CD and tape-based. A few companies had created hard drive-based players and Apple saw an opportunity and delivered a far better product and experience. You make it sound like Apple created this whole new market and people eventually warmed to it. That's not true. SONY was selling millions upon millions of Walkman players and had been for years. Apple delivered the right product at the right time as the market transitioned to digital files from physical media. And it was a HUGE hit. But the consumer was already well accustomed to carrying his or her music around. The Watch market is nothing like that.
So, Apple enters a market where they have the ability to innovate, they do a proper marketing strategy, and the media provides lots of hype, and as a fact disappointment, but you don't think that the category is worth pursuing, based on the initial first months of sales?
Elon is doing the exact same thing with Tesla, and there are still many naysayers, but it will be easy to prove him right; all he has to do is start large scale manufacturing of batteries and the path to the future for automobiles is electric.
Apple too can afford to develop the market for this, even over years.
1) Yeah, I didn't catch any sarcasm.
2) I agree that something will fail, and that it's most likely the Swiss watch makers. Not that luxury and collector watches will die, or that cheap watches from China in the 100s of millions won't still be commonplace, but that the bulk of the revenue and profits will likely be had by Apple within in 5-10 years, no matter what they do.