Morgan Stanley is predicting in an investor note that around 10% of those who own an iPhone 5 or later will buy an Apple Watch, generating first year sales of around 30M – right at the top end of the 10-30M range suggested by other analysts.
While predicting likely sales of a new product category is always a rather shaky undertaking, and sales of competitor smartwatches may not prove a reliable guide, Morgan Stanley thinks there is one clue to how well the Apple Watch might sell: the precedent set by the iPad …
Consensus estimates for first-year iPad sales were 5M, with skepticism about consumer demand among those who already owned iPhones. Actual sales were 15M units – 14% of iPhone owners at the time. Given even higher numbers for claimed purchase intention among US consumers surveyed, Morgan Stanley believes that 10% of owners of the iPhone 5 and up is a conservative estimate.
Our 30M Apple Watch unit estimate in CY15 [Calendar Year 2015] is at the high end of consensus and arguably still conservative. Street estimates run the gamut,with most ranging between 10M and 30M units in the first year. We believelooking at penetration into the Apple installed base yields the most realistic assessment of demand potential of the Watch. Our 30M unit estimate implies 10% penetration into Apple’s 315M iPhone 5 or newer installed base exiting 2014, which is lower than iPad penetration of 14% in its first year.
One big unknown at present is just how long ‘calendar year 2015’ will be in terms of Apple Watch availability. While a February launch had been predicted, Apple has so far only said ‘early 2015‘ while a leaked comment by retail head Angela Ahrendts said that the launch would be in “the spring.”
Via Business Insider
FTC: We use income earning auto affiliate links. More.
Seeing as to how much of the functionality and feature set of this watch is dependent on having an iPhone’s support, I would think that the 10% figure is low – unless Apple really overestimates the price on the entry level model. If it’s priced correctly I think it will be a hit out of the gate.
That is one serious moronic calculation/prediction from Morgan Stanley. Most people simply get a new iPhone because their contract expired, as was the case before smartphones. So instead of paying € 10 – € 15 a month they now spend € 35 – € 50 which is perfectly fine as they now get a phone with way more options.
If Morgan would state that this 10% of iPhone 5 and newer phones would buy the Watch when these people also bought their iPhone straight from Apple.com, unsubsidised, yeah, that would be a more realistic prediction. But I guess Morgan needs to say something to stay relevant. Which is difficult for them, being stuck in the 90’s as their website still uses Flash. Who has that installed on their Mac?
The argument is based on what was seen with the iPad, rather than the iPhone.
Since most buy thier iPhones subsidized and the Watch basically starts out at 2x the subsidized phone price, shouldn’t Morgan Stanley project that 10% of people who buy the phone contract free will buy the apple watch?
I know plenty of people who pay $199 and $299 for a newer iPhone and wouldn’t be able to cough up at least an extra $350 more for a watch. I would think the people who pay $800 for the iphone could more easily afford $350 for a watch
iPads were (largely) unsubsidized too.
iPads are stand alone products. The Watches aren’t.
That’s why you can’t conpare iPad sales vs potential watch sales.
It’s true that you can buy an iPad without owning an iPhone, though I’d guess that a very high percentage of iPad owners also own an iPhone.
Read the article (again?). They are predicting based on how well _iPads_ sold as a fraction of iPhone install base.
The selling price of an iPad is in a similar range to that of the watch… so it makes sense.
One issue I see is that they’re basically predicting that current Apple customers will buy in again. The problem is that this may cannibalize sales elsewhere. No – a watch is not a replacement for an iPad but you can see how someone might forego upgrading an iPad to get a watch… which is basically a wash as far as revenue is concerned for Apple.
I, going at the opposite direction, predict the first generation Apple Watch may be a Titanic tragedy for Apple. And that comes from a huge fanboy. Of course, my prediction will depend on the price of the gadget. Just one day battery, if it resists until the end of the day, it is a death sentence to the device’s success. I think Cupertino might reduce its profit margin to avoid this bad situation.
Only rectifying better reading the article I found the sales forecast made by Morgan Stanley realist and possible, but I estimate no more than 10 million units sold.
I don’t think so. The iPhone “only” has about 1 day of battery life under use. The device probably will be able to last more than a day, but people will play with the thing all the dang time. Tim Cook stated that it would last “about a day” but put that in context of people’s actual usage patterns. Android smart watches probably last for a week on a charge, but they sit in desk drawer somewhere.
It’s funny how that works. You’re dealing with physics and people’s insatiable demands on these devices.
The Apple Watch is being targeted as more than a regular, geeky smart watch. It’s shooting to be fashion and so far has seemed to piqued the interest of the fashion community to a wide degree. Apple will NOT reduce profit margin to “avoid a bas situation”. They don’t do that. Never have and it would go against the market strategy of the device. You don’t reduce the price of a “designer pair of jeans that cost $250” to sell more. That would undercut the desirability of the product.
I will definitely look at one of these. I had a look at a Pebble steel the other day and so very nearly got one … The killer app from me is the ability to control podcasts on iOS
Peapod comes close in that it’s integration with the music app is what I want of podcasts but there seems to have been a development fall out and no one is doing much with it.
Shame because I thing the Pebble Steel is the neatest design of all the current smart watches
Just sent my Pebble Steel back today. Out of the box it worked fine for about a week, then I started noticing that I was missing text/call notifications and the watch was really taking a toll on my iPhone battery life (iPhone 5s). The e-ink display, while a great idea in theory, was also difficult to read on a small screen and I could not figure out a way to swap the display from white text/black background to black text/white background which I think would’ve helped the readability issue. Overall I decided it wasn’t worth the $199 price tag.
For Apple, just by selling an Apple Watch to 5% (1/20) of iPhone 5 and up owners would be a success story. Even if it is the lower tier Apple Watch at $350 that would be a $3.5+ billion business.
Why would I buy a stupid electronic watch for $300+ dollars that does not do a thing for me that my iPhone already does? A watch that will not last or be upgradeable. A watch that is the answer to the question nobody is answering.
I think you mean, nobody is *asking*
Obviously plenty of people want a smart watch
I don;t even want a dumb watch. Took my last watch off the day I got out of the Army and have not worn one since (1990).
I don’t see people upgrading these every year. I know some company is working on a modular smart watch.
If you aren’t the kind of person who is willing to spend $300 for headphones than I think it’s fair that you are’t one of few kinds of persons who’d buy an apple watch. Unlike the iPhone, this isn’t something for everyone. It’s a luxury accessory – or if you are a fitness person, it’s a fitness tool.
fintness people will buy it because they tend to spend money on tools to help them with their passion. Fashion people will buy it because they have iPhones and they can afford the extra luxury. Some Tech people will buy anything to be on the cutting edge. But unlike the iPhone, this doesn’t have universal appeal. Hence why there are different “editions” that appeal to different people.
Even though I didn’t get the first iPhone, it was something I knew I wanted right away. The watch doesn’t do it for me. Maybe In like 5 years I’ll be interested. Not now though. Like you, I don’t perceive this as valuable enough to warrant the extra expenditure.
The world does not revolve around you. There are plenty of people who will buy this because it solves an issue for them. First of all there are the millions of iPhone 5s users who want to use ApplePay. Then there are those who want the fitness features (I had to spend $100 for a Fitbit that wont be 1/10th as good as this). I am not saying you should buy an iWatch, just saying there are plenty of people out there that don’t see the world the same way you do. People used to say the same about smartphones (I had the first Treo), but over time things improve and the uses become more apparent.
Most people wear a watch which only tells time and maybe date. Why not, if you’re an iPhone owner, add so much more wrist functionality to that which you are already wearing? Things like notifications, activity tracking, Apple Pay, etc… For those who already prefer to wear a watch so they don’t have to pull out their phone every time they want to check the time, this is perfect. You don’t like to wear a watch and don’t mind pulling out your phone just to check the time, fine… The Apple Watch isn’t for you, no one will force you to buy it.
I already know exactly how many Apple will sell throughout 2015.
However many they can make in 2015.
Well let’s hope it’s not so bad that we can’t even get one! :-)
I don’t see that much buying a $350 watch. Google needs to add iOS support to android wear. I like the look of moto 360 much better than the apple watch (looks like 1st generation iPhone).
Round screen is great for a watch, terrible for a smart watch since round screens are not practical to display text and data. I personally think the Apple Watch looks less elegant than the Moto 360, but in turn looks more modern and futuristic.
Apple’s strategy is to appeal to different sets of people who are willing to spend extra money. Tech geeks, sports people, and fashion people with expendable income – normal people don’t make the cut.
Other companies don’t have the ability to tap into the luxury good market like Apple can and can only appeal to the tech and sport people. That’s why apple has the advantage here. I’m sure in a few generations it will be cheap enough, more standalone functions, and cool factor that it will have more appeal to the commoner but I don’t think adoption will be anything like the iPhone. The watch just doesn’t standout as something everyone needs and doesn’t replace something everyone was buying anyway. The cell phone replaced watches for the average person. The iPhone replaced phones and media players. The watch replaces… nothing.
I’m not saying there isn’t reasons to want it and that people won’t buy it. I suppose you could look at how well $300 + beats headphones are doing. They are an expensive accessory with little value to normal people but I see enough people with iPhones and beats on the subway that Apple will do well with the watch. Will my dad have one in 5 years? probably not. But he did get an iPhone.
I think people need to see this in the context of “it’s also a watch replacement”. Point being, most people who wear watches normally don’t mind dropping $200 to $300 on a regular watch that only tells time and date. In that context, the Apple watch at $350 to $400 is a bargain.
I like watches that last – I have two Hamiltons going back to the dawn of the wristwatch era, from the 1920’s.
With care they will last another hundred years. So do I pay $350 minimum for a watch that will last, at most, three years – difficult decision.