How is the Apple Watch Selling
It is admirable how Apple changes the landscape of any market it enters. The same goes for the Apple Watch and its impact on the wearable market. With the initial announcement last fall, we were certain that once Apple releases its first wearable device it will instantly become a major player on the market. In reality it became such before the device was released, as publicity through online debates, predictions and speculations was overwhelming. Now, two months after first devices shipped, we can start analyzing how well is the Apple Watch actually selling.
Unfortunately, Apple is determined not to reveal the actual sales figures or the distribution ratio across countries, device models or target audience. Therefore, to get an insight into how well the product is doing we need to turn to third party sources. According to the U.S.-based marketing company Slice Intelligence, the number of Apple Watch pre-orders from Americans was at about one million units. The most popular pre-order model was a cheaper aluminum Sport line starting at $349. The rest of the orders were for the stainless steel collection with a price tag of $549 and higher. The number of those who decided to get the gold series is yet unclear but rumored to be under 2,000 items so far. The most popular colors were quite conservative: “space gray”, stainless steel, silver aluminum, and “space black” steel. Band choices were rather dull as well. In general, a consumer spends about $504 on the device, acquiring the average of 1.3 watches or a watch and several accessories. Most pre-orders (71%) preferred the bigger (42mm) model.
According to the latest IHS report, cited by Reuters, Apple is making good money on selling just the Apple Watch accessories such as bracelets: the production cost of the most popular Sport Band sold at $49 is a bit more than 2 dollars. Given that on average a buyer acquires 1.3 bracelets, the band gives a good boost to the product’s overall margin.
As for the target audience buying the device, Slice Intelligence states that most people who buy the Apple Watch already own other Apple products. So, Apple has lots of potential buyers eager to get the yearned-after device. Yet, first criticism is starting to surface and some reviews are a bit disappointing. There are mixed opinions on the battery life, lack of functionalities and a limited number of applications to call the gadget useful. However, numerous celebrities are sporting a new Apple Watch adding to the hype: Beyoncé, Rapper Drake, JJ Abrams, Katy Perry, and Karl Lagerfeld to name a few. Apple knows that a good advertising campaign is half the battle won.
In general, the sales information is still scarce. Even at the Apple Loop event that took place last month Tim Cook delivered no triumphant sales figures announcements, though several months had passed since the public release. The company decided not to distinguish the Apple Watch as a specific category in its quarterly earnings. It is said that only 4% of Apple’s current value is based on the Apple Watch brand. However, there might be another reason for that as the company fears that sales of the well-publicized gadget will not come up to the public expectations. Some reputable analysts still believe in Apple, while others seem to express doubts, lowering their initial forecasts for the Watch’s financial performance.
While the sales of the Apple Watch fell 90% since the opening week, it is too early to label it as a commercial failure. The device is vastly outperforming its competitors. Even if the new Apple Watch will not make significant contributions to the company’s bottom line, it will provide a good platform for Apple to further improve the product through newer models. Most importantly, a device’s popularity is largely attributed to the variety and quality of third party apps, an indicator that keeps growing steadily for the Apple Watch.