If you're in the camp that believes the Apple Watch is further evidence of the decline of the Cupertino empire, then you will see the news out of IDC as evidence to bolster to your case. The latest report on wearable technology shows everyone growing nicely -- except Apple, whose Watch sales "plummeted" 71% in the most recent quarter.
What most of the reporting on this "news" out of IDC is that it isn't news at all. The firm reported the very same Apple Watch data back in October, albeit in a different report focused just on smartwatches. Yet somehow the media latched onto this report and Reuters asked Apple CEO Tim Cook about the IDC report.
Cook, of course, didn't offer specifics -- Apple doesn't break out Watch sales and hasn't since launch, nor does it tell media outlets selective data in the middle of fiscal quarters -- but he did respond to Reuters. "Sales growth is off the charts. In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product’s history. And as we expected, we’re on track for the best quarter ever for Apple Watch."
What does that mean numbers wise? Again, we can't know precisely though IDC itself thinks Apple sold 4.1 million Apple Watches last year in the fourth quarter. While some of those sales benefited from aggressive retailer promotions that knocked the starting price down from $349 to $249, it's worth noting that this year the base price has fallen to nearly that level ($269).
The Watch is also a better product this year, with a faster processor; a better, more streamlined operating system; superior battery life and improved features. While the last of the items on the list requires selecting the pricier Series 2 models, even those are priced no higher than last year's models and now are available with new options, including bands and software from Nike. Series 2 also includes integrated GPS and are also better for swimmers, with more complete waterproofing.
(It's worth mentioning many swam for more than a year with the original Apple Watch, sometimes now called "Series 0" and had no problems doing so. Still, having 50m water resistance as an option is valuable to some.)
That Apple is forging ahead is perhaps noteworthy in itself. In recent days, Lenovo announced that its Moto division won't be releasing a new smartwatch to run on Android Wear 2.0, joining Huawei and LG in skipping a 2016 model release. While Moto didn't rule out a future return to wrist-based wearable technology, it also offered no suggestion as to when that might come.
In the meanwhilee, Pebble, whose Kickstarter-backed smartwatch arguably jumpstarted thre whole category, agreed to be acquired by Fitbit for an estimated $40 million. This wasn't a merger of two high-flyers either. Fitbit has seen it stock fall from the mid-$30s to $8 a share in the past year. Pebble has laid off staff and tried to find a way back to its initial success. Whether the two together can find the success that Android smartwatch makers have yet to achieve remains to be seen.
But where does this leave Apple? If the Watch does indeed have the record quarter Cook expects, Apple should sell on the order of 5 million before the year ends. That would put sales to date somewhere around 20 million after 20 months on the market. Doesn't look impressive compared to thre 40 million iPads in its first 6 quarters of sales (55 million if you believe 7 quarters is a fairer comparison).
But it is a bigger total than iPhone, no matter which time window you choose. Not only did Apple struggle to forge a breakout hit with its first smartphone, it saw sales oscillate even beyond typical seasonality at first. This isn't to suggest the Watch is the next iPhone (nothing is, get over it). Still, it's probably worth understanding that now is early to judge exactly where the Apple Watch is going to wind up in the company's pantheon. It hardly feels like a true flop, on the order of the Mac Cube or Newton -- neither of which worked or sold well.
Arguably, the biggest issue with the Watch is that it was both released late and early. When it shipped in spring of 2015, it was behind its original schedule due to a longer-than-expected software development cycle according to many sources. But it also was released with a user interface that was too complex and impenetrable while lacking software tools that allowed for good performing apps.
Only recently, with WatchOS 3.0 has the interface been streamlined and the Watch found its way. It isn't a place to build miniature iPhone apps, even though there are still vestiges on the home screen suggesting otherwise (leftovers from some innovative, but directionally questionable ideas in the original WatchOS). It's instead a powerful fitness tracker that lets you quickly receive notifications from your most important apps. It's a remote control for your music listening, the best way to use Apple Pay, a way to answer your phone when you left it in another room, and a pretty handy way to unlock your Mac without a password.
That might well not be worth $269 or more to you, but if you're in a big city look around and you might be surprised to see how many wrists are now sporting an Apple Watch. That it's worth it to an ever-increasing slice of Apple's billlion-plus-user base is likely enough for Cook right now while Apple continues to tweak the UI, work on the next generation design, and figure out where the real entry price should be. I suspect that if Apple can build a $199 model down the road, they would be able to sell tens of millions each year.
In 2016, though, something closer to just one of those "tens of millions" likely will have to do. That's still billions of dollars worth of watches. Isn't that the real news here?
