Tim Cook: Apple Watch Sales 'Exceeded Expectations'

[Benjamin Frost]

I resent Cook's evasiveness. It reminds me of Bezos of Amazon, the King of smoke and mirrors. I could feel the annoyance from the analysts over Cook's unwillingness to give Apple Watch figures. It's no wonder shares plummeted.

I noted that Cook emphasised how the next Watch software update would bring terrific apps to it. So he is effectively saying to everyone, "Don't bother buying the watch now; wait a few months until there are some decent apps for it, because there aren't any now."

Not exactly a vote of confidence in the current product.

 

[RDeckard]

Agreed but it's pretty clear that it's in the 3 million ballpark.All I'm saying is why be cryptic. Either say it how it is or reveal nothing.

They already revealed nothing: They said it was "better than internal expectations" -- which means nothing. They could have expected to sell exactly 2 watches, for all we know.

 

[thekeyring]

They did what most thought was impossible: created a new billion dollar buisness.

D00med, indeed.

 

[Reds622]

I'm saying that those Wall Street analysts/jamokes are usually wrong about most things, especially when it comes to Apple.

So the numbers aren't the numbers? Not sure what your argument is. The numbers have been provided. A fairly strong estimate can be provided from the numbers provided directly from Apple. Either way, ignore the numbers, think what you wish.

 

[C DM]

Trying to hide it in 'Other products' reveals Cook's insecurity and complete lack of confidence in this device.

Or there are other good reasons that are in play.

 

[RDeckard]

So he is effectively saying to everyone, "Don't bother buying the watch now; wait a few months until there are some decent apps for it, because there aren't any now."

Not exactly a vote of confidence in the current product.

No, it's effectively what you interpreted he said -- not what he said. Big difference.

 

[Shaun.P]

As expected, Apple did not share specific sales numbers on the Apple Watch during its third quarter earnings call, but Apple CEO Tim Cook did shed some light on how well the Apple Watch did during its first quarter of availability. According to Cook, Apple Watch sales "exceeded expectations" despite supply continuing to trail demand at the end of the quarter. "We feel really great about how we did," he said.

Cook also pointed out that Apple Watch sales during its first nine weeks of availability were higher than sales of the original iPad and iPhone when those devices first became available for sale. June sales, he said, were higher than those in April or May, suggesting reports of falling demand in June were inaccurate.

Apple includes the Apple Watch in its "Other Products" category in an effort to keep its competitors from getting a detailed look at its shipments. Other Products includes the Apple Watch, the iPod, the Apple TV, and accessories like Beats headphones.

During the third quarter of 2015, the Other Products category saw $2.6 billion in revenue, up from $1.7 billion during the second quarter of 2015, a difference of nearly a billion.

Cook said "it would not be inaccurate" to look at the sequential change or the year over year change ($874 million) and "assume that's the Apple Watch revenue," hinting that Apple Watch revenue in the quarter hovered around $1 billion or higher. Apple CFO Luca Maestri made a similar statement to the Associated Press, stating revenue from the Apple Watch amounted to "well over" the $952 million increase between the two quarters. Both Maestri and Cook pointed out that iPod and accessory sales, which are also included in the category, are shrinking, attributing more of the revenue in the quarter to the Apple Watch.Aside from analyst estimates that range from an estimated 2.85 million sales to 5.7 million, that rough $1 billion revenue figure that accounts for the difference between Q2 and Q3 is the closest we've come to learning how many Apple Watch devices Apple sold.

Cook went on to say that beyond the "very good news in sales," Apple is excited about how the Apple Watch is positioned for the long term. There are now 8,500 apps available for the device, and the company is poised to release watchOS 2 in the fall, which will bring native apps and performance improvements. "We believe the possibilities for Apple watch are enormous," said Cook.

Article Link: Tim Cook: Apple Watch Sales 'Exceeded Expectations'

I am confused about the part I have emboldened.

If supply trails demand, doesn't that mean demand is higher? Why, then does it say "despite"?

 

[thekeyring]

I just find this hard to believe. Guess most bought the $399 watch. Its a toy after all.

Not seen a Sport on anyone's wrist but see a ton of stainless steel watches. Look through this thread - someone else has had the same experience.

Why can't people see this has been somewhat successful even when the facts indicate that?

 

[gibbz]

I am confused about the part I have emboldened.

If supply trails demand, doesn't that mean demand is higher? Why, then does it say "despite"?

He's saying they actually delivered more watches than expected, despite the fact they still can't meet demand.

 

[LordVic]

I am confused about the part I have emboldened.

If supply trails demand, doesn't that mean demand is higher? Why, then does it say "despite"?

I believe he's saying demand is higher than supply

the "despite" indicates that the sales would be higher, if they had enough product to sell.

 

[Karma*Police]

You and me too, I can't help but remember the comments on MR after the Galaxy Gear was released, laughing how Apple wouldn't release something with less than 2 days battery life and a touchscreen/simple zoom interface. As far as I can see it's just a nicer version of a Gear. Nobody I know who's tried it has said its interface was intuitive like the iPhone immediately was, though they'll 'learn to love it'. =/

Ah well, I'm not one to judge on how people spend their money. If it works for them and it's a useful tool, it's good that Apple have a product in the wearable market.

iPhone's interface was intuitive for a lot of people for 3 reasons:

1. Apple spent a boatload of money on commercials designed to educate and familiarize people with this radical device.
2. Steve Jobs gave what many consider to be the best keynote of his life and gave a phenomenal demo.
3. The larger screen allows for making some things more obvious, like offering menus and clearly labeled buttons.

That said, there's nothing "intuitive" about double tapping to zoom or shake to undo or left/right gesture to delete an item or tap and hold to move/delete icons, etc. These are all learned behaviors. The watch is just as "intuitive" once you get to know a few tricks.

 

[dannys1]

People just don't wear watches as much as they used too. The smartphone is all you need.

Disagree - in fact the first 10 days of wearing the Watch reminded me how much I dislike to use my phone for some things and how i'm glad I don't use it as much...nothing worse than seeing people wondering round like zombies with their heds staring at their phone screens.

 

[ron7624]

They have given a pretty good indication of how many they have sold so why not be transparent.Im all in on the watch but can't persuade anyone I know to get one despite them mostly having more money than me and being impressed with what it can do.

They are probably folks like me, that is people waiting for the dust to settle and possibly the next iteration. I have not been overly excited about it but do think I will eventually buy one.

 

[craig1410]

I resent Cook's evasiveness. It reminds me of Bezos of Amazon, the King of smoke and mirrors. I could feel the annoyance from the analysts over Cook's unwillingness to give Apple Watch figures. It's no wonder shares plummeted.

I noted that Cook emphasised how the next Watch software update would bring terrific apps to it. So he is effectively saying to everyone, "Don't bother buying the watch now; wait a few months until there are some decent apps for it, because there aren't any now."

Not exactly a vote of confidence in the current product.

Actually Apple give out more financial data than almost any other large company so they are hardly like Amazon.

Nobody expected any Apple Watch figures because to give exact figures would tip the hand to competitors and provide them with extremely valuable market information. Also, the Apple Watch is still supply constrained so any figures given would only show how many Apple are capable of making, not how many they could have sold. Apple themselves even made it crystal clear in the last quarterly call that they would be putting Apple Watch into the 'Other' category for now.

As for your last comment about not having any decent apps for the Watch OS 1, there are plenty of decent apps and I use many of them every day. However, having native app development capability in Watch OS 2 will permit significant improvements and in some cases will make new categories of app possible/practical as it won't have to communicate with the iPhone all the time. We've known that native app development would be available in Watch OS 2 since the Watch was announced so this is not a shock and doesn't indicate any lack of confidence in the Watch. In fact, I don't think anyone could be more confident in the future success of the Watch than Tim Cook as it is his baby.

 

[dannys1]

Trying to hide it in 'Other products' reveals Cook's insecurity and complete lack of confidence in this device.

Or it just stops the competitors knowing exactly what Apple has achieved. But hey, you stick to your strange opinion on reality

 

[RDeckard]

Trying to hide it in 'Other products' reveals Cook's insecurity and complete lack of confidence in this device.

So, the "analysts" are guessing that Apple sold about $1B in Apple Watches in the first quarter it's been available.

For comparison, that's more revenue than Microsoft's entire Surface line for the same quarter (which has been available for, what, 2+ years?). That's not too shabby.

 

[LordVic]

Disagree - in fact the first 10 days of wearing the Watch reminded me how much I dislike to use my phone for some things and how i'm glad I don't use it as much...nothing worse than seeing people wondering round like zombies with their heds staring at their phone screens.

I'm a watch wearer.

and this is the only time i'll openly admit this...

I'd buy an iPhone and Apple watch if the watch fit my style. But subjectively, I am not a fan of the design. the fit, finish and quality of tech is pretty good.

(and the prices in Canada weren't absolutely... disgusting. $950 w/tax for the iPhone is WAY TOO MUCH)

 

[Soccertess]

I always thought Apple should make the Apple Watch Android compatible after the initial adoption period. Iphone is a strong product, so much so that I think if they they made it Andriod compatible, they would enticed more potential customers to the Apple Ecosystem.

Anyways, if there sales are strong I doubt it would happen.

 

[firewood]

Weil, 2.6B divided by $350 is 7.4 million units. So Apple gave away the absolute maximum number of watches they could have sold, assuming that iPod and Beats (etc.) sales went to zero, and that everybody only purchased the cheapest 38mm model Sport Watch.

 

[Benjamins]

Disagree - in fact the first 10 days of wearing the Watch reminded me how much I dislike to use my phone for some things and how i'm glad I don't use it as much...nothing worse than seeing people wondering round like zombies with their heds staring at their phone screens.

While you have your head up staring at your watch screen. What a liberating experience.

 

[Karma*Police]

I resent Cook's evasiveness. It reminds me of Bezos of Amazon, the King of smoke and mirrors. I could feel the annoyance from the analysts over Cook's unwillingness to give Apple Watch figures. It's no wonder shares plummeted.

I noted that Cook emphasised how the next Watch software update would bring terrific apps to it. So he is effectively saying to everyone, "Don't bother buying the watch now; wait a few months until there are some decent apps for it, because there aren't any now."

Not exactly a vote of confidence in the current product.

The lack of transparency works in Amazon's favor so why not?

If Apple's competitors don't know what's driving growth of the "other" category, they can't focus on any one thing. When Apple pounded its chest about iPhone and later iPad sales numbers, they basically painted a HUGE target on their backs and you saw everyone scrambling to get a slice of the action.

I haven't agreed with some of Tim's recent decisions, but I think he is smart not to disclose Watch figures.

 

[craig1410]

Anyone interested in informed analysis of the Apple results should take a look at Horace Dediu's twitter feed and website. He's also doing a live podcast just now: https://twitter.com/asymco

 

[RDeckard]

Trying to hide it in 'Other products' reveals Cook's insecurity and complete lack of confidence in this device.

Well, I would like to know exactly how many Apple Watches were sold, broken down by model and band choice. Please also tell us how much was spent on R&D, sales, marketing, etc. This is really useful information.

Yours truly,
Samsung

 

[ladycsr]

Well Mr. Cook, you could have slapped the numbers in todays report.

 

[Benjamin Frost]

The market doesn't believe Tim Cook, and why should it?

Nothing speaks louder than clear sales figures. That has always been a good indication of the health of a product. Cook effectively signalled the failure of the watch even before it went on sale when he stated that he wouldn't reveal sales figures.

And now, he is having to justify the watch couched in descriptive adjectives that mean nothing other than that he is trying to hide the failure of the product. It's a sad turn of affairs.

I wonder if he will use the same tactic for Apple Music. I note that he was happy to boast of millions of people signing up for it—even though it's currently free. Is that not helping the competition? Apparently not in Cook's book. But will he give concrete figures after a year of paying subscribers? If he doesn't, we will know it has failed, as he has already divulged a rough figure of millions now.

I guess we now know what all that sapphire was wanted for: mirrors. The smoke is provided by the forest fires in drought-stricken California.