Apple Watch Sales: Off To A Great Start

Jul. 15, 2015 10:26 AM ETApple Inc. (AAPL)171 Comments

Summary

  • Apple Watch sales are estimated to be 4.5 million units in its first nine weeks of availability in the June quarter.
  • The Slice Intelligence report of a 90% drop in Watch sales in June ignores in-store purchases and sales outside the U.S.
  • As hardware and OS become more capable, I expect future generations of the Watch to become the user's primary voice/video communication device.

In a little over two months of availability in the June quarter, Apple sold a total of over 4.5 million Apple Watches, according to analysts' estimates. That puts it well ahead of the iPhone launch in 2007, in which Apple (NASDAQ:AAPL) sold just 1 million units in roughly the same time frame. Apple Watch has a bright future, despite what some market research polls might indicate. In its launch quarter, Watch will add about $2 billion in revenue to Apple's top line.

Supply Constrained

As we enter earnings season, there are many Apple Watch detractors who want to paint the Watch as a failure. Sales estimates for the June quarter vary, but I believe the most reliable comes courtesy of Philip Elmer-DeWitt's round up of analyst's estimates for global Apple Watch sales. The number is less than I expected when I wrote about the Apple Watch pre-order sell out. At the time, I expected Apple to sell about 10 million watches in the June quarter. The Watch has been much more supply constrained than I expected.

However, I still expect Apple to sell in the neighborhood of 30 million units in calendar 2015 as production ramps up and we enter the December quarter. WatchOS2, unveiled at WWDC, should also help to stimulate demand when it arrives sometime this fall.

Apple may not report specific Watch unit sales at its upcoming earnings call next week, but Watch revenue is expected to be booked in the Other Products category. It should produce a noticeable step up in revenue on a quarter over quarter basis. In the March quarter, revenue of the Other Products category was $1.69 billion, so an additional $2 billion will be hard to miss.

This revenue estimate is based on a $450 ASP and amounts to a rough guess of

This article was written by

Mark Hibben profile picture
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Balanced, expert investing strategies from a technologist's perspective
Mark has a masters in Electrical Engineering from USC, is an independent iOS developer, and blogs about technology trends and companies, the focus of his investments.

Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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