I originally wrote this article on January 31, 2017. Since then, Apple Watch Series 3 has shipped and the product has continued to grow. This fall, it surpassed Fossil, Rolex, and other incumbents to become not only the most popular wrist computer on earth, but the most popular watch period.
Now, following Apple's latest quarterly financial results — the best ever until the next — analyst Horace Dediu has made another, more important, observation. Wring on Asymco:
From a revenue point of view, I believe next year's fourth quarter will see the Watch generating higher revenues than the highest quarter for the iPod.In terms of yearly unit sales it may take longer. The biggest year for iPod units was 2008 when about 55 million iPods shipped. Watch is now running at about 16million. If it could sustain 30% growth then it would take until 2022. 40% growth would mean 2021 and 50% 2020.It's not easy to predict growth but my bet remains that Watch will get there eventually becoming the third most popular Apple product. Perhaps even second.Overtaking the iPod is quite an achievement considering that the iPod was once synonymous with Apple itself.
iPhone set an impossible expectational bar. Measured against it, nothing else on earth can be considered a success, including other legitimately successful Apple products, including Watch. But that's why smart analysis and savvy, contextually-sound reporting is key.
Apple Watch is strong and getting stronger. Continuing to frame it as anything else indicates failure only and completely on the part of the framer.
Original article below.
There's a strange narrative in the tech community concerning Apple Watch being a flop, a failure, or in some way, shape, or form, a disappointment. It's particularly bizarre given Apple Watch, as part of the wearable market, is doing record numbers.
From Tim Cook's opening remarks during the Apple's Q1 2017 conference call:
It was also our best quarter ever for Apple Watch — both units and revenues — with holiday demand so strong that we couldn't make enough. Apple Watch is the best-selling smartwatch in the world, and also the most-loved, with the highest customer satisfaction in its category by a wide margin. Apple Watch is the ultimate device for a healthy life, and it's the gold standard for smartwatches. We couldn't be more excited about Apple Watch.
One of the hits on Apple Watch is that Apple doesn't break out numbers for the product the way they do for iPhone, iPad, and Mac. Many companies provide no numbers on any products, Amazon being a prime example. Yet that hasn't prevented the very same tech community from pushing a very different narrative around Echo:
Expectations drive narratives. Apple Watch outselling Amazon Echo by 3x yet Apple Watch is deemed a disappointment vs Echo a raging success.Expectations drive narratives. Apple Watch outselling Amazon Echo by 3x yet Apple Watch is deemed a disappointment vs Echo a raging success.— Neil Cybart (@neilcybart) November 29, 2016November 29, 2016
Neil's estimate for Apple Watch for Q1, as published on Above Avalon, was 5.4 million units. For context, that's the same number of Macs Apple sold over the same holiday quarter. It also puts total estimated Apple Watch unit sales at over 25 million to date.
It's not the iPhone business by a long shot — nothing is — but it's big enough business that any other company would sacrifice a C-level executive or two to get it.
Yet, the narrative around Apple Watch was so lost that when Google delayed Android Wear 2, vendors like Motorola/Lenovo exited the market, and Pebble sold itself off, hot takes tripped over each other claiming the "smartwatch market" might be dead.
Fitbit, which makes a wide range of fitness-focused wearables, also didn't face the same kind of pessimism from the tech community. Indeed, they were promoted as incredibly popular and far more flexible thanks to their greater diversity of styles and price-points. Yet their last quarter painted a very different picture.
Apple Watch, meanwhile, just had its best quarter ever. Which, when you combine Apple Watch Series 2's improved hardware, Apple Watch Series 1's lower cost of entry, and watchOS 3's greater coherence, performance, and fitness focus, pretty much anyone could see coming. (Interest in Apple Watch purchases briefly peaked even higher than iPhone on iMore, based on Black Friday and holiday pageviews.)
It could be that there is no real "Smartwatch market", just an Apple Watch market. Much like there's no real "tablet market", just an iPad market. Since it's such a new product category and most of the existing products are still bound to phones, it could also simply be too soon to tell.
Smartwatch market share dominance also likely. https://t.co/hMa6JFVUb5Smartwatch market share dominance also likely. https://t.co/hMa6JFVUb5— Ben Bajarin (@BenBajarin) January 31, 2017January 31, 2017
Either way, it's crystal clear that Apple Watch is leading the way, not just in the smartwatch category, but as Apple's bridge to wearable technology in general.
From the same conference call:
With AirPods off to a fantastic start; a strong, full first year for Apple Watch; and Beats Headphones offering a great wireless experience using the Apple-designed W1 chip, we now have a rich lineup of wearable products. Their design, elegance, and ease of use make us very excited about the huge growth potential for wearables going forward.
When you look at what these products do with wireless, voice interface, communication, authentication, and more, and how each one increases the overall value of the Apple experience, it makes the bizarre narrative surrounding Apple Watch seem downright... disconnected.
Apple Watch had its best ever quarter. Really big ongoing disconnect between tech and normal user expectations & satisfaction.Apple Watch had its best ever quarter. Really big ongoing disconnect between tech and normal user expectations & satisfaction.— Benedict Evans (@BenedictEvans) January 31, 2017January 31, 2017
Today, Apple Watch is a breakthrough accessory for iPhone. Tomorrow, the sky body's the limit.
