Apple loyalists taking time to buy a new Apple Watch

24 Jul 2015 | Author: | No comments yet »

Apple Watch charging docks could get less clumsy with official licensing.

SAN FRANCISCO (AP) — Apple’s stock slid sharply on Tuesday after the company reported strong iPhone sales but remained coy about the performance of its new smartwatch.If you’re thinking about buying a third-party charging dock for the Apple Watch, you may want to wait for officially-licensed versions to come around.

Apple may not be revealing exactly how many watches its has sold in the last quarter, but analysts at research firm Juniper have been crunching the numbers and come up with an estimate of up to 2.5 million. If capturing a remarkable 92% of global smartphone profits and accumulating $200 billion in cash reserves doesn’t prove the Apple ecosystem is working, I don’t know what does. Although several third-party Apple Watch docks are available already—with some even popping up before the smartwatch went on sale—none of them have an actual charger built-in. Strategy Analytics said on Wednesday that the Apple sold 4 million devices in the second quarter of 2015, giving it a 75 percent share of the smartwatch market.

Juniper based its figures on statements from the company’s executives, including chief executive Tim Cook who said “It would not be an inaccurate thing to look at the sequential revenue, the year-over-year change and assume that was the total watch revenue”. CEO Tim Cook and his team of merry moneymakers aren’t providing concrete guidance, but there’s plenty of data that shows the tech giant’s first new product in half a decade is off to a great start. Until the Watch launched, revenue in this sector was declining at a rate of about $200 million per quarter, as sales of iPads and other accessories declined.

Apple CFO Luca Maestri also had something to add on the matter, saying Apple Watch’s contribution “accounted for well over 100 per cent of the growth of the category”. In one tantalizing clue, Apple reported $2.6 billion in revenue from the segment that includes the watch and several other products, or about $952 million more than the previous quarter, when the watch had not yet gone on sale. We would also expect a decline in sales following launch, especially as H1 draws to a close,” said Juniper devices analyst James Moar. “This means we are unlikely to see more than 7 million Apple Watches sold by the end of 2015, even with a boost to sales over the Christmas period.” To put that in perspective, Apple sold 1 million iPhones in its first 74 days and 3 million iPads during its first 80 days, so Cook’s statement that “sell-through was higher than the comparable launch periods” for both the iPhone and iPad on Tuesday’s earnings call is credible. Apple is reportedly providing “sample quantities” of its charging modules to manufacturing partners now, and 9to5Mac says to expect the first licensed accessories to arrive by year-end.

Apple also forecast that revenue for the quarter ending in September will fall between $49 billion and $51 billion, indicating total sales could fall below Wall Street estimates of $50.8 billion. Why this matters: While Apple-sanctioned docks will likely be more expensive than unofficial solutions, they should allow for simpler and slicker designs.

Many early reviewers of Apple’s latest flagship device have written public breakup letters to their watches because they believe it doesn’t offer any life-changing features. And according to Re/Code, a report that Watch sales are decelerating that was widely picked up by the tech media failed to take all sales channels into account. It has terrible battery life that lasts just 18 hours, notifications have a three-second delay from the phone, and the fitness tracker is weak compared to other devices. For the latest quarter, Apple said revenue from all sources grew 33 percent from last year to $49.6 billion in the April-June quarter, with the iPhone contributing $31.4 billion in sales. And while the smartwatch category is just getting started, IHS expects Apple to exit 2015 with 56% market share for the year with Samsung, LG, Pebble, Motorola and dozens of others fighting over what’s left.

That beat the estimates of Wall Street analysts surveyed by FactSet, who were expecting Apple to report earnings of $1.81 per share on sales of $49.25 billion. Consumer demand for new models usually wanes as time passes, but Apple’s sales are continuing to grow faster than they did in a comparable period after the iPhone 5 went on the market in 2012. Believe it or not, CNET said Apple’s first smartphone didn’t live up to the hype, recommended that folks wait for the sequel and gave it just 3.5 out of 5 stars. On the flip side, reviewers showered Apple’s initial smartwatch with praise, calling it “the best experience of any smartwatch tested,” “the world’s best smartwatch” and “light-years better than any of the feeble, clunky efforts that have come before it.” And after wearing it for a month, the venerable Walt Mossberg likened it to the first version of the iPhone, gave it a thumbs up and called it “a very good product – with a chance to be great.” If Apple Watch is killing it out of the gate, the question remains, why is Apple breaking from its tradition of sharing early sell-through numbers?

But analysts say the company should benefit from the size of its user base: Hundreds of millions of people own older iPhones and are expected to buy new ones when their two-year wireless contracts come up for renewal. While a hallmark of Apple is its laser-like focus on very few products – and it’s principally an iPhone company – it’s got a lot more going on than it did back in the day. I love to GTS, which I don’t know if it’s a thing, but to me it stands for “Google That Sh-t.” I like to ask Siri for dumb things like, “What are the lyrics to ‘What does the Fox say?'” or directions when I find myself in life or death situations: “What’s the closest ice cream place?” Therefore, Siri on my wrist is way more practical than taking out my phone, holding the home button and having to wait till the voice assistant pops up. There are new platforms like CarPlay, HomeKit and HealthKit and new services such as Apple Pay, Apple Music and the long-awaited streaming TV service. If this is Apple’s way of toning down the hype until it comes into its own as a product deserving of the limelight, I think that’s actually a fairly sensible strategy, assuming it doesn’t dampen the enthusiasm of third-party app developers.

If the watch just gives users another reason to remain in the fold or iSwitch from Droid to iOS, I’d call that “mission accomplished.” Steve Tobak is a management consultant, columnist, former senior executive and author of the upcoming book, “Real Leaders Don’t Follow: Being Extraordinary in the Age of the Entrepreneur.” Contact Tobak. However, with the new update, developers will be able to use the software development kit to build apps that have access to the watch hardware: the accelerometer, microphone, speaker, force touch, video, heart rate monitor and the digital crown.

The Activity app currently only keeps track of calories burned, exercise time and also constantly bugs the user to stand up for a minute every hour (which I’ve ignore multiple times because of my thrall to my office desk). I really look forward to seeing other apps that will let me unlock my car from my wrist, play videos on apps like Vine and even control smart appliances at home. Just like the iPod and iPhone, the first generations were weak and were only admired by Apple devotees and early adopters, but now they are high-demand products that people claim they can’t live without.

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