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The Apple Watch: Debating the Use Case

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.