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  • About the “Failed” Apple Watch

    December 1st, 2015

    How often do you read about the failed Samsung Galaxy Gear smartwatches? How often do you read about the failed Android Wear smartwatches? Or even the Pebble? But you sure hear plenty about how bad Apple Watch is allegedly doing compared to — what?

    Yet some unfortunately uninformed members of the tech media imagine that Apple’s goals, or their own goals, weren’t met. Thus, the Apple Watch is unsuccessful. Indeed, one of the turkey-of-the-year reports I read had it listed as number one. Why? Well, I suppose because it was unfinished, although there was no exact definition for that word. Or maybe because the Apple Watch can’t hold a charge for two or three weeks, at least not yet.

    Regardless, the prevailing estimates of Apple Watch sales are six million as of the end of the September quarter, counting the abbreviated first quarter and the second quarter of sales. True, those figures are interpolated from Apple’s “Other” revenue category, since Apple Watch sales aren’t listed separately.

    Before I go on, let me tell you that I think Apple is making a mistake withholding these numbers. That decision was made even before the Apple Watch went on sale, and one presumed reason was that competitors might benefit from knowing how many were sold. But since independent analysts are probably in the ballpark with their estimates — and Apple’s competition is perfectly capable of running their own calculations — the truth is, more or less, out there already. Refining it a few hundred thousand up or down shouldn’t make a huge difference.

    I suppose you can take the Machiavellian point of view about Apple’s decision, but I’m sure they believe they had valid reasons for doing so. Remember that the smartwatch market is not yet a proven winner. It may take a few years to realize its potential, and no doubt Apple will be patient. I also expect that, five years down, the Apple Watch will be vastly different from the one you have now.

    A key change may be untethering it from the iPhone, which currently makes it an accessory. It does some stuff without the iPhone, but not much. But in the next few years, it should be an independent gadget, and there might even a version with a cellular radio so you could originate phone calls on it. Battery life will no doubt improve greatly, so perhaps you’ll be able to use it two or three days before it needs to be connected to the charging cable or charging dock.

    No, I do not expect to see millions of people bringing their wrists to they mouths to make and receive calls. In addition to using it as a speakerphone, meaning you won’t have to move your wrist, there’s always a Bluetooth earphone. It’s even possible that such an Apple Watch will carve out a decent portion of the mobile handset market one day, even though it wouldn’t necessarily replace the iPhone for most people.

    It’s a potential that can only be hinted at today. And even if Apple Watch sales didn’t match Apple’s expectations, whatever they really are, there is too much invested in the ecosystem to kill it quickly. It’s not like the infamous Power Mac G4 Cube, which was just another Mac in a fancy case. Very little was lost when it was terminated with extreme prejudice.

    In any case, with Black Friday past us, there are already estimates of how many units will sell this holiday quarter. Obviously you’d expect it would be much higher than previous quarters, since the Apple Watch is ideal for gifting, assuming you can afford the price of admission and care about watches.

    So industry analyst Daniel Ives of FBR & Co. already has a prediction. He reportedly based it on checks with Apple’s retail stores on Black Friday. His conclusion is that sales could reach six million for the quarter, roughly the same as the previous two quarters combined.

    Now to be fair, Apple has actually provided two clues as to how many units were sold. During the July quarterly conference call with financial analysts, Apple executives claimed that sales had exceeded that of the first-generation iPad and first-generation iPhone during the comparable period, the first 80 days. So that would mean it was higher than the three million iPads sold during that timeframe.

    In a published report, Ives is also quoted as saying that, over the next three years, wearables will become a market that exceeds $20 billion, and if Apple retains its dominant position, that would be a significant contributor to its revenue base. Sure, there will be more competition, but even though the iPad’s dominance is less than it used to be, the iPad is still synonymous with tablets. What other tablets are people talking about beyond, say, a Kindle, with unknown sales. Other than Apple Watch, what other models are receiving much attention?

    Well, I suppose Pebble because it’s much cheaper. I even saw them at a Sam’s Club discount warehouse the other day. But I didn’t see people lining up to buy them, or much of anything for that matter. Well, the TV shelves received some attention, and I did see a couple of large boxes being transported in carts to the motor vehicles of their new owners. I suppose the Pebble could gain a decent market share going forward merely as a result of being the lower cost alternative. Perhaps Pebble might even harness a spruced up version to go mano-a-mano with the Apple Watch. That might even be interesting.



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