Why Apple might not have high hopes for the Apple Watch
Why Apple overcame currency headwinds to produce strong earnings (Part 9 of 14)
Apple Watch
At a major event in September, Apple (AAPL) launched two main products—iPhone 6 and Apple Watch. Although iPhone 6 and Plus stole most of the limelight, Apple Watch was also considered an important launch for Apple . It’s the first new product that Apple has launched in four years. The last product that Apple launched was the iPad in 2010.
Also, the wearable device market is considered to be the next growth area in the mobile device industry. The smartphone and tablet markets are reaching saturation levels.
According to a report from the International Data Corporation (or IDC) and as the chart below shows, the wearable device market will more than triple to 19 million units in 2014. It will grow to 112 million units by 2018. It will grow at a compound annual growth rate (or CAGR) of 78%. This is why so many tech players want to enter the market.
A few months ago, Google (GOOGL) launched the Android Gear operating system. It’s specifically designed for smartwatches and other wearable devices. Samsung (SSNLF), Sony (SNE), and Nike (NKE) also entered into the smartwatch market. This shows the market’s growth potential.
Apple will combine iPod sales with Apple Watch
Beginning in 1Q15, Apple will change its reporting structure to better reflect its products. It will continue to report the iPhone, iPad. and Mac as separate product segments. It will also have a new category—”Services.” The category will include sales from iTunes, the App Store, and Apple Pay. However, the most surprising change was forming a new “Others” category. “Others” will include iPod and Apple Watch.
By combining Apple Watch with iPod, Apple might have given the impression that it doesn’t have high hopes for Apple Watch. Apple will start shipping it early next year. Apple reserved a separate product category for iPhone and iPad before they launched.
During the conference call, Apple said that this change says nothing about the company’s expectations for Apple Watch. In the future, it might change its reporting structure to better reflect Apple Watch sales.
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