The Apple Watch: Debating the Use Case

May 22nd, 2015

If you’re curious about how many Apple Watches have shipped to customers, don’t expect any early satisfaction. Apple has put the numbers in a miscellaneous category on its financial statement, and there was no press release touting the launch week numbers. Just crickets. While Apple claims that orders exceeded supplies, that’s not an answer, since we don’t know how many were produced, and how many orders were actually placed.

Curiously, the question was never asked during the last quarterly conference call with financial analysts. A colleague suggests that Apple may have alerted the financial community that they would have no statement, but you sort of feel someone could have spoken up without losing their status as a participant. Besides, financial analysts aren’t reporters and will not necessarily ask probing questions during such sessions.

So we’re left with guesswork. The were early reports that maybe two or three million units were ordered. It’s also reported that Apple is managing to ship product ahead of the early promises, so maybe they are catching up with demand, whatever that demand might be.

Long term estimates of Apple Watch sales seem inconsistent or maybe not. Analyst Ming-Chi Kuo says demand is leveling off and expects 15 million to be sold by the end of the September quarter. But Morgan Stanley analyst Katy Huberty has raised expected sales 20%, from 30 million to 36 million units during the first 12 months of availability. That would seem to be a vast difference except for the fact that she’s referring to a full year, not less than six months as Kuo suggests. It’s possible both figures are correct for the timeframes they specify, so they aren’t all that different after all.

Regardless, whether Apple sells 15 million in six months, or 36 million in the first year, the figures are far above what smartwatch makers have collectively managed since such products first came into being. So the expectations appear to be extremely high for a brand new product in a brand new category for Apple.

Remember that iPhone sales didn’t exceed 30 million until 2010 (39.99 million), its fiscal fourth year on sale. First fiscal year global sales were 1.39 million. In 2010, the year it was introduced, some 7.5 million iPads were sold; some 32.4 were sold in the second fiscal year. By those standards, the Apple Watch will be way ahead of the curve as a first-year product if projected sales are accurate.

But at a time when even selling over 50 million iPhones is no longer impressive, I can see where even realistic expectations about the success of the Apple Watch may seem disappointing in comparison, but they shouldn’t be.

Unfortunately, when the media covers Apple, perspective is often thrown out the window. I can understand the skepticism about wearables. It’s not as if people are truly clamoring for them, although there’s been a lot of talk about the Apple Watch. That you have to usually wait weeks to get one also creates the feeling you are buying something that’s in high demand, even though we have no idea how many Apple can actually built.

At least you should be able to buy the one you want at many Apple Stores in June, according to Apple’s current promise, and I have no doubt they’ll be fulfilled for at least some configurations. The real question is all about potential. How many people are willing to spend from $349 to $17,000 for a smartwatch, or any watch for that matter? While a watch may be suitable for fashion, isn’t it more about the looks than the features in many cases?

In recent weeks, I’ve had long talks with guests on The Tech Night Owl LIVE about the Apple Watch. There’s a healthy dose of skepticism, and the feeling on the part of some that they wouldn’t consider buying one if it wasn’t for their business. Sure, you can see legitimate uses for one. Those into fitness might appreciate its ability to record some of your health records and track your walking and jogging. Getting brief notifications of critical matters rather than being forced to pull out your smartphone and spend a far longer amount of your valuable time might also be an advantage.

One of our guests suggested women might be more inclined to want to buy one. The reason is that it’s a whole lot easier to check your wrist to manage a message, or even a phone call, than rummaging through a purse to retrieve a smartphone before the call goes to voicemail. I know that I frequently encounter problems getting ahold of my wife on her iPhone. The ring tone is muted in her purse, despite being turned up to full volume, and she often doesn’t get to it in time.

At least she calls back.

Now it may well be that ideal use case for an Apple Watch will be defined by the third party apps. It wasn’t clear what needs the iPad would serve either at first, and some feel it still doesn’t meet their needs. Regardless, I’m not about the suggest the best uses for Apple Watch. The market will tell us if its truly destined to be successful once the early adopter demand is satisfied.

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5 Responses to “The Apple Watch: Debating the Use Case”

  1. Viswakarma says:

    Apple Watch is NOT a watch, but a multi-purpose computer and communication device on a person’s wrist.

    Depending on the user and the use case it can be tailored to take care of the situation.

    It is a new incarnation of an ICT device!

    The “Analysts” will not be able to understand the utility of this device. They are more like the proverbial “Blind men and the Elephant”!!!

    Hence, their estimates are not worth the time one has to spend on! Their only good for the “Financial Market” denizens of Wall Street to trade their base ball cards!

  2. DaveD says:

    When iPods and iPhones first came on the market, the ever-be-so-thankful-for early adopters stepped in. I believe that their experiences and if it is good will provide the fuel to launch the sales upward. We may not see the need today, but Apple creates products that the rest of us would want in the near future. As the market grows the other manufacturers will play again, follow the leader.

  3. DFS says:

    Problem with the Apple Watch is that it doesn’t do much for you that your iPhone isn’t already doing. Biometrics for fitness nuts and hypochondriacs? Yes, but how large a market is that, and can’t you buy specialized biometric gear a lot cheaper? This sort of thing is about a million light years away from my own personal needs (I’d only use it to check every now and then whether my heart’s still beating, and if I’m dead I’d rather not know about it). So when you really get down to it, what’s it good for? Apple needs to come up with more compelling answers than it has so far. If it can’t, and if third party developers can’t come up with more creative ideas than Apple seems able to produce, this product might well lay an egg.

    Yes, Viswakarma, the Apple Watch is a lot more than a wristwatch. But maybe it shouldn’t be. It’s now possible to buy, and beginning at remarkably low prices, a wristwatch that’s astonishingly more accurate than even the most expensive Swiss handmade jobs, where the accuracy is not measured in +/- seconds per month but in +/- seconds per millions of years. I’m referring to watches that synch with atomic clocks. So far there have been two ways of achieving this. One is by having a watch synching with an atomic clock by radio. Problem here is that appropriate radio stations are only available in the continental US, western Europe, Japan and China. A bit awkward if you happen to be a world traveler, but a lot awkward for a manufacturer who can only market his product in limited parts of the world. Second way is by synching with satellites in geosynchronic orbit, which eliminates that problem but, I hear, has the problem that synching with satellites involves a huge drain on a battery. But now the Apple Watch does the same thing a third and non-problematic way, simply by synching with its owner’s iPhone via Bluetooth. Personally (since I’m an accuracy freak) I’d leap at a chance to buy an upscale, elegant-looking watch that just did this and nothing more. So I have my eye on manufacturers like Frederique Constant and Vectorwatch, who are developing watches that do just about that. For my needs, something along this line is a lot more desirable than an Apple Watch. And i. m. h. o. the Apple Watch is drastically overpriced (four hundred bucks for a stainless steel expansion band!!!) so I think going this route will make my dollar go a great deal farther.

  4. Viswakarma says:

    “Apple Watch” is a “Wolf in Sheep’s Clothing”!

    Most probably Apple called it a “Watch” to introduce this device through the known use of a person’s wrist to determine “Time”.

    Apple perhaps should have called “Apple Watch” something else to make its true nature and function obvious. However, it has decided to call it a “Watch” to use the known metaphor for people to indicate that this device goes on a person’s wrist.

  5. Viswakarma says:

    Apple’s naming of products is to give the users/owners of these more capabilities than their names imply.

    iPod for Audio in the guise of a music player.
    iPad for Audio, Video, and Office Applications.
    iPhone for Audio, Video, Communications and Office Applications.

    One should look beyond the names Apple’s products, to understand what their real capabilities are, and how they can be used in day-to-day lives!!!

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