Is The Apple Watch A Bust?

[Tugg Speedman]

Apple Watch sales plunge 90%
http://www.marketwatch.com/story/apple-watch-may-not-be-ticking-with-customers-2015-07-07?siteid=rss&rss=1&curator=thereformedbroker&utm_source=thereformedbroker



Sales of the new Apple Watch have plunged by 90% since the opening week, according to a new market-research report.

Apple AAPL, +0.95%  has been selling fewer than 20,000 watches a day in the U.S. since the initial surge in April, and on some days fewer than 10,000, according to data from Palo Alto, Calif.-based Slice Intelligence.

That is a sharp decline from the week of the April 10 launch, when Apple sold about 1.5 million watches, or an average of about 200,000 a day, Slice estimates.

Furthermore, two-thirds of the watches sold so far have been the lower-profit “Sport” version, whose price starts at $349, according to Slice, rather than the costlier and more advanced models that start at $549.

In an ambitious bid for the luxury market, Apple unveiled a gold “Edition” model priced at $10,000 or more. So far, fewer than 2,000 of those have been sold in the U.S., Slice contends.

Slice bases its research on electronic receipts sent to millions of email addresses following purchases. The company conducts market research on behalf of consumer-goods companies, among others, many of them in the Fortune 500.

Wall Street has been desperately trying to work out how well the new watch has been selling, but Apple has been refusing to say. The company, which in the past has updated Wall Street on the sales of new products soon after the launch, has yet to release any numbers about the watch.

Apple did not immediately respond to a request for comment.

How worrying are these numbers for Apple investors, fans and customers? It’s a mixed picture.

On one hand, you’d expect sales of any new product to tumble after the initial bump (and the first week’s numbers are heavily weighted toward the opening day). The watch is only a tiny part of Apple’s business. Trefis, a stock-research company, ascribes just 4% of Apple’s current value to its watch business.

But this fall-off in sales, if confirmed, nonetheless looks ominous. And the Apple Watch is much more important than any immediate contribution to earnings would suggest.

The Apple Watch is the first completely new product the company has created and launched since the death of its visionary founder, Steve Jobs, in 2011. How well the watch fares may be one measure of how well Apple may be able to maintain the standards of excellence in innovation, marketing and production it achieved under Jobs. Investors are used to seeing new products, such as the iPhone and iPad, fly off the shelves as soon as they are launched.

The Apple Watch is also a foray into the world of so-called “wearable tech,” which is supposed to offer yet another big surge in product sales for Apple and its rivals in the years ahead. Once everyone has a smartphone, they are supposed to go out and get a smart watch, followed by smart eyeglasses, and so on. Or, at least, so goes the theory.

Apple’s Watch has entered a competitive market for wearable tech, against rivals such as health-monitoring wristband Fitbit FIT, +3.01%

It’s early days yet on the Apple Watch, but investors may have reason to be cautious.

[Skatastrophy]

The market just can't support the $650 price point for a smart watch. That's as much as a new phone.

[JWags85]

Yet they are rumoring Apple Watch 2 for early 2016.  Probably up it to $750.

[Litehouse]

Motley Fool article responding to the MarketWatch article explaining how it's very misleading.
http://www.fool.com/investing/general/2015/07/09/the-apple-watch-hysteria-is-out-of-control.aspx?source=eogyholnk0000001

Even with the data from the article, Apple has sold about 5.5 million watches in the first quarter, and it's only just now available to actually go buy in a store.  I'd say they're doing just fine.

[CreightonWarrior]

Once they figure out the battery situation I think we'll see another boost

[4everwarriors]

It ain't gonna rival Rolex, ai na?

[ChicosBailBonds]

If you go to one of our digital labs, I would say 50% of the guys working in them have the watch.  Not my cup of tea, but these folks love the latest and greatest.

[4everwarriors]

Yet they are rumoring Apple Watch 2 for early 2016.  Probably up it to $750.

Does everthin' but provide ya with a bj, hey!

[Blackhat]

Watches are out.   Motorized carts is where it's at.

[StillAWarrior]

Not really my deal either, but I know a few people who have them.  I can't help but recall some of the snickers and complaints that accompanied the release of the iPad.  That turned out OK for Apple.  I'm not sure the watch will ever be a huge seller, but it'll do just fine.

[tower912]

Apple will be fine.   

[MUWarrior2007]

Watches are out.   Motorized carts is where it's at.

But don't you know?  In 2-weeks, motorized carts will drive themselves and all jobs will be obsolete and we'll have an all new economy due to self-driving motorized carts!

[Chicos' Buzz Scandal Countdown]

Yet they are rumoring Apple Watch 2 for early 2016.  Probably up it to $750.

why would they increase the price of a product with volume that's fallen off a cliff and the early adopters market segment already tapped.

If anything they'll cut price; Apple has never increased the price for the iPhone, I'd be shocked if they started now with the Apple Watch.

[Chicos' Buzz Scandal Countdown]

Not really my deal either, but I know a few people who have them.  I can't help but recall some of the snickers and complaints that accompanied the release of the iPad.  That turned out OK for Apple.  I'm not sure the watch will ever be a huge seller, but it'll do just fine.

The iPad has turned out to be a huge customer satisfier. Apple Watch maybe ahead of the category.

With the iPhone, the value proposition was instantly compelling, even before the device itself could live up to it (battery, processor, data speeds, etc).

The Apple Watch doesn't have a compelling value prop yet for a meaningfully sized market.

I think they've mortgaged their brand value slightly for this one so far.

[Tugg Speedman]

The iPad has turned out to be a huge customer satisfier. Apple Watch maybe ahead of the category.

With the iPhone, the value proposition was instantly compelling, even before the device itself could live up to it (battery, processor, data speeds, etc).

The Apple Watch doesn't have a compelling value prop yet for a meaningfully sized market.

I think they've mortgaged their brand value slightly for this one so far.

15 years before the iPad, Apple introduced a tablet called the Newton

https://en.wikipedia.org/wiki/MessagePad

It bombed.

Then they tried again with the iPad ... home run.

Is the Apple Watch another Newton?  Too far ahead of its time?  It will fail and years later another attempt with a watch will be a huge success?

[GGGG]

The Newton may have been a "tablet," but functionally is was way different than the iPad.  If you are saying "ahead of its time" in that the Apple Watch can become something more than a "watch with some aps," then perhaps.  But I don't know what it then becomes.

[Litehouse]

Another article critical of the Slice marketing information that has been repeated as the source of all these articles.  Admittedly it's from Apple Insider, but they raise a lot of issues with the legitimacy of the underlying data.
http://appleinsider.com/articles/15/07/08/apple-watch-collapsing-sales-report-actually-shows-apple-is-crushing-smartwatch-sector

[#UnleashSean]

I mean it is a horrible idea isn't it? Same function as a phone, but smaller screen, less power, harder to use. And it looks pretty dumb while wearing it.

[Chicos' Buzz Scandal Countdown]

I think the idea of wearables will be huge but I don't think we have the technical efficacy to make it meaningful yet. I agree the watch look doesn't really do it for me, either.

[#UnleashSean]

I think the idea of wearables will be huge but I don't think we have the technical efficacy to make it meaningful yet. I agree the watch look doesn't really do it for me, either.

It's just something I can't comprehend any reasonably feasible thing to do with it. I mean the desktop -> laptop -> tablet -> phone all makes sense with the pro's of mobility over the con's of power. But I can't think of any situation where I would be using a watch over a phone.

[Tugg Speedman]

It's just something I can't comprehend any reasonably feasible thing to do with it. I mean the desktop -> laptop -> tablet -> phone all makes sense with the pro's of mobility over the con's of power. But I can't think of any situation where I would be using a watch over a phone.

+1

What made the iPhone 6 a hit?  Answer ... LARGER screen (especially the 6plus).  Then less than a year later Apple says, forget that you need a SMALLER screen???

Until the watch has apps or functionality that makes more sense on the watch than any other device, I also don't see the point.

PS to anticipate an answer, GPS watches that monitor distance, pace , heart rate for fitness exist now, and have for years.  And they are a fraction of the Apple Watch's cost.  So the Fitbit or Garmin watches makes sense (for less than $100) but the Apple Watch (many times more money) does not.

[Tugg Speedman]

The Newton may have been a "tablet," but functionally is was way different than the iPad. If you are saying "ahead of its time" in that the Apple Watch can become something more than a "watch with some aps," then perhaps.  But I don't know what it then becomes.

This is exactly my point.  It is a technology in search of a purpose.  Now that purpose may happen soon.  And when it does, I will strongly consider one.  Until then, I do not see the point.

Additionally, the Samsung Gear watch is a much better device (but much geekier/uglier).  It works as a stand alone phone.  It does not have to be paired with a smart phone like the Apple Watch.  So you can go running/jogging with one and have a functional phone with you without the additional baggage of having to carry a smart phone.  And it is half the price of the Apple Watch.

[MUsoxfan]

+1

What made the iPhone 6 a hit?  Answer ... LARGER screen (especially the 6plus).  Then less than a year later Apple says, forget that you need a SMALLER screen???

Until the watch has apps or functionality that makes more sense on the watch than any other device, I also don't see the point.

PS to anticipate an answer, GPS watches that monitor distance, pace , heart rate for fitness exist now, and have for years.  And they are a fraction of the Apple Watch's cost.  So the Fitbit or Garmin watches makes sense (for less than $100) but the Apple Watch (many times more money) does not.

I won't upgrade to the 6 for the sole reason that the screen is too large. People are almost starting to look like Zack Morris with these clunky unnecessarily large phones

[Chicos' Buzz Scandal Countdown]

This is exactly my point.  It is a technology in search of a purpose.  Now that purpose may happen soon.  And when it does, I will strongly consider one.  Until then, I do not see the point.

Additionally, the Samsung Gear watch is a much better device (but much geekier/uglier).  It works as a stand alone phone.  It does not have to be paired with a smart phone like the Apple Watch.  So you can go running/jogging with one and have a functional phone with you without the additional baggage of having to carry a smart phone.  And it is half the price of the Apple Watch.

The best explanation of wearables I heard was from Evernote's CEO, Phil Libin - https://hbr.org/2015/05/evernotes-ceo-on-the-new-ways-we-work

If you think about the devices we have now, they facilitate a different amount of time and intensity of work
Laptop/Desktop - (Used 1-3 times a day for several hours at a time) - Most effective for working long hours on spreadsheets, coding, and content creation
iPad - (Used 10-20 times a day for 30-60 minute chunks) - Most effective for long-form content consumption, and very little content creation (reading a book/magazine, games, browsing online, movies, email, note taking)
iPhone - (Used >100 times per day, in 2-3 minute chunks) - Most effective for portable, short-form content consumption, and even lighter content creation (Music; reading, but not responding at length to emails, etc)
Wearables - (Used thousands of times a day for 2-5 second chunks) - This is the space the Apple Watch is shooting for.

I think the idea of quickly seeing messages on your wrist would be more convenient than fishing out your iPhone, but that alone doesn't justify a new device. If there can be many more intuitive benefits in those quick, 5 second use cases, then I think wearables will take off.

The idea of talking into your wrist for a phone call or text, however, seems awkward. Pretty much every adapted app for Apple Watch seems forced and not yet really clear why it exists on that platform

I also think the fitness stuff might be a feature set that doesn't necessarily belong on the device. Other than runners or older people trying to count steps, I haven't heard many powerful user stories about fitness devices such as Garmins or fitbit.

I think the fitness stuff remains a niche market for wearables.

[mu03eng]

I also think the fitness stuff might be a feature set that doesn't necessarily belong on the device. Other than runners or older people trying to count steps, I haven't heard many powerful user stories about fitness devices such as Garmins or fitbit.

I think the fitness stuff remains a niche market for wearables.

Really depends on what you definition of niche is.  Admittedly I'm in the niche as an avid runner but I think those that are in the fitness group are rapidly expanding.  I would never get an apple watch, but I love my fitbit surge.  I get my fitness tracking stuff plus call notification and I can read text messages on it.  It's nice because I don't have to drag my phone out unless I want to answer/respond.  I can also control my music if I'm streaming from the phone with my fitbit.

I see much more robust user story in the fitness/basic message integration space than I see anything in the full blown Apple watch area.  For the apple watch to be effective and profitable it needs to me something I do all the time more convenient/easier/productive and I just don't see that value add yet from the product.  I don't yet see where those 2-5 second interaction activities are easier because of Apple.  I always ask with these types of products, is it cool or is it good....right now Apple Watch is still just cool to me.