Apple Watch owners are actually pretty pleased with the device, study shows

21 Jul 2015 | Author: | No comments yet »

Apple Watch may be a dud, but iPhone sales continue to soar.

There are no hard numbers that indicate just how popular the Apple Watch is. Apple chief executive Tim Cook, right, takes a photo with an Apple employee during the launch and sale of the new iPhone 6 at an Apple store in Palo Alto, Calif., in 2014. (Tony Avelar/The Associated Press) Analysts expect another powerhouse performance from the California tech giant when it reports quarterly financial results Tuesday. As usual iPhone sales will be the driver for the quarter and this will be the first time Apple provides results for the Watch even if management isn’t willing to break out details.

Wall Street analysts estimate Apple will report a hefty $10.3 billion in profit after selling $49 billion worth of iPhones, iPads, Mac computers and other products during the April-June quarter. Techpinions analyst Ben Bajarin joined forces with Apple Watch research platform Wristly to survey Apple Watch owners and found that 97 percent are satisfied with the watch, which is higher than the percentage of original iPad and iPhone buyers who were happy after those respective launches.

At my estimate of $50.4 billion Apple would generate its highest revenue growth rate (34.6%) since the March 2012 quarter (58.9%) and this is with significant currency headwinds. Apple has said it won’t release sales figures for the new Apple Watch, though some analysts believe demand has fallen since Apple introduced the wearable gadget three months ago.

But it almost doesn’t matter: As in other recent quarters, Apple will reap its biggest rewards from its smartphones, especially the new, big-screen iPhone 6 and 6 Plus models introduced last fall. While design and quality satisfaction rates are high, performance and battery only scored a 28 percent satisfaction rating, and ease of use clocked in at 43 percent (though women were more pleased with ease of use than men). If you assume that the Watch’s average selling price (ASP) is $550 each million unit swing adds or subtracts $550 million in revenue and $0.02 in EPS if you assume a 35% gross margin. Some consumers were drawn to Android devices in recent years because they had bigger screens, but Apple’s decision to increase the iPhone’s screen size is persuading Android owners to defect, said Ryan Reith, who tracks smartphone sales for the research firm IDC. Apple likely sold about 47 million iPhones during the most recent quarter, or 34 percent more than a year earlier, according to analysts polled by FactSet.

This would be an 18% quarter to quarter decline from March sales of 61.2 million units and compares to the past two years declines of 17% (iPhone 5) and 19% (iPhone 5c & 5s). While Apple doesn’t break out the numbers, Canaccord Genuity analyst Michael Walkley estimates that during the first three months of 2015, Apple reaped 92 percent of the $16.6 billion in operating profit generated from smartphones by companies around the world. Microsoft, meanwhile, is cutting 7,600 jobs and writing down the value of its Nokia phone division by $7.6 billion, essentially acknowledging that its effort to build a business selling Windows smartphones had failed.

Though Apple has often trumpeted sales results for new products, Cook has said he doesn’t want to reveal Apple Watch figures for competitive reasons. Instead, Apple will lump revenue from the watch into its “Other Products” category, which includes the iPod media player, Apple TV streaming device and Beats headphones.

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