Apple has become a victim of its own success. In the eyes of analysts and the media, any product that doesn't sell as well as the iPhone, i.e. 9 million in a weekend, the product is a failure, never mind that Apple's competitors would do anything to post such a "failure." Look at what happened with iPhone sales. On paper, analysts projected around 48 million phones. They wanted 50 million iPhones sold, though. Apple sold only 47 million. The stock lost almost 7% after hours.
Something is messed up about that picture. Let's put something into perspective here. Apple's posted revenue that was almost triple that of Google this quarter. In spite of this, for all the talk about Apple falling prey to the "law of large numbers," Apple's revenue growth was more than quadruple that of Google this quarter. Google beat expectations quite handily and its stock soared by 16%. Granted, Apple didn't smash expectations. But still, I can't understand how meeting expectations warrants a 7% drop in the stock.
What I have described is the case every quarter. Given the market's irrational expectations, Apple is smart to be tight-lipped about Apple Watch sales.
An added benefit is that the space is not very crowded. When the iPad came out, many predicted that it would not sell well. But they were totally wrong. The unexpected success led to a gold rush of tablet manufacturers coming out with competing offerings. But that's not happening with wearables. Companies are not rushing to start selling smartwatches. Everyone is taking their time and hedging their bets. The public is still not sure if the Watch was a success or not. All the public knows is that the Watch met internal expectations. But that's not enough to spur another gold rush.
