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Fast Company, however, has already declared it a dud. A recent headline, which has gained some traction, reads “Why The Apple Watch Is Flopping.” Its author, Mark Wilson, had previously written an article called “You Guys Realize The Apple Watch Is Going To Flop, Right?” And Wilson seems pleased with his quick conclusion. “The Apple Watch, despite years of hype before it was even announced, appears to be flopping after all,” he writes.
Wilson’s evidence mostly consists of a couple recent reports. The first finds that Apple Watch online orders in the US have collapsed from their initial levels (see Quartz’s earlier coverage here) and the second says Fitbit fitness trackers are still outselling the Apple Watch.
Not that we’d know. “There is no reliable information on Apple Watch sales,” long-time mobile industry analyst Horace Dediu writes. And Apple has already announced that it would not immediately disclose quarterly watch shipments.
One source—Slice Intelligence, the company whose
e-commerce shopping receipt data is cited in most preliminary
reports—has seen a drop in orders. But that is simply one estimated
measurement, from one unproven source, for one country.
And as Dediu notes, as the Apple Watch is
increasingly available in Apple retail stores and other retail outlets,
the share of total orders placed via Apple’s website seems likely to
decrease. “To see US-only online purchases drop after a period of
pent-up demand and as store inventory becomes available is not
interesting and says almost nothing about the product’s performance,” he
writes.
More broadly, this is hardly peak gadget-buying
season. As for most consumer electronics, the December (holiday) quarter
will likely be Apple’s largest for watch sales. Last year, Apple
generated almost 40% of its overall sales during the December quarter,
versus almost 20% during the June quarter.
Of course the Fitbit could be outselling the Apple Watch right now.
Fitbit’s devices are significantly less expensive
than Apple’s and have wider distribution. Fitbit booked $68 in revenue
last year for each of the 10.9 million devices it sold. The Apple Watch
starts at $350. Cheap compact disc players surely outsold the iPod for
years.
Many people do want to buy the Apple
Watch. In one recent survey, commissioned by RBC Capital Markets, 58% of
respondents said they planned to buy a fitness tracker, smartwatch, or
both over the next 12 months. Of those, 21% said they planned to buy an
Apple Watch, versus 42% for Fitbit. (Most said their budget was under
$200.) In another survey of would-be wearable-device buyers, conducted
by Morgan Stanley, 34% of respondents intended to purchase an Apple
Watch, versus 15% for Fitbit.
Clearly, both Apple and Fitbit will survive in the near term.
Let’s not kid ourselves: This first Apple Watch is not a must-buy device.
We like ours a lot, but we also know people who have abandoned theirs or sold them.
It’s just not something everyone needs. But neither was the first iPod,
iPhone, or iPad. Of the 726 million iPhones Apple had shipped through
March, only 0.2% were shipped in the first three months. (Recall that
Apple even cut iPhone prices by $200
a couple months after their mid-2007 debut.) And of the 271 million
iPads shipped through March, only 1% were shipped in the launch quarter.
Even if the Watch is on its way to becoming a mega-hit, we probably
wouldn’t know by now.
Over time, the Apple Watch platform will either mature into something more people want or need, or it won’t. (The idea of a wrist computer commanding a personal cloud
seems too potentially promising for Apple to ignore.) Recall that it
took several years for category-defining iPhone apps like Instagram and
Uber to be invented. Note how much hardware design—thickness, battery
efficiency, etc.—and pricing has changed over the years.
Today, the Apple Watch is a relatively expensive
toy—with some early utility—for curious people. It is silly to call it a
massive success yet, but it is equally foolish to call it a flop. It is
simply too early, and not enough is known.
