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Watch this space: Apple bullish over Q3 results

Paul Withers
August 3, 2015

CEO Tim Cook rejects reports Apple Watch sales have plummeted since April launch

Apple has rubbished reports that Watch sales have struggled, claiming numbers for the comparable period are greater than those seen for the first iPhone and iPad models.

The technology giant’s CEO Tim Cook made the comments on a conference call with analysts to discuss the firm’s record Q3 financial results for the three months ending June 27.

Last month, a study from US-based analytic company Slice Intelligence claimed sales of the Watch had fallen by almost 90 per cent since it went on sale in April 24 in nine counties, including the UK. This has since been extended to 19 countries.

Using e-receipts from almost 2.5 million US-based shoppers, the analytic firm estimated that sales of the Watch had fallen from a peak of 45,000 per day to just 5,000 per day, resulting in the 90 per cent decline. Slice claimed the data collaborated with both Amazon and the US Department of Commerce sales figures.

Making progress
However, Cook dismissed this, claiming the Watch had sold better in the initial nine-week sales period through to the end of June than the initial iPhone and iPad in their respective product cycles.

Apple did not disclose Watch sales figures, but several analysts have estimated it to have topped three million units.
Cook claimed sales had exceeded expectations and that sales in June had in fact been greater than they were in May or April and is now at a point where supply has caught up with demand after initial issues.

“Sales of the Watch did exceed our expectations and they did so despite supply still trailing demand at the end of the quarter,” he said.

“Through the end of the quarter, the Apple Watch sell-through was higher than the comparable launch period of the original iPhone or iPad. We were able to do that with only having 680 points of sale. Sales in June were higher than in April or May, and that is very different from what is being written.

“We started taking pre-orders in nine countries on April 10 and demand immediately exceeded supply by a wide margin. Online sales were so great at the beginning that we weren’t able to feed inventory to our stores until mid-June.

“We made huge progress with production across the quarter and by the end of it expended into six countries. In the past few days, we have been able to catch up with demand, enabling us to expand Apple Watch availability to a total of 19 countries.

“We feel really great with how we did. I feel fantastic about what the team has done and delivered and I get lots of notes about people that feel the same way.”

Off the charts
Cook also pointed to a number of surveys and research pieces that suggested the Watch was Apple’s most popular and exciting mobile device ever, claiming customer satisfaction was “off the charts”.

He referenced a survey of 800 Watch owners by wearable research provider Wristly, which found satisfaction numbers were higher than those for the first iPhone and iPad models.

Ninety-seven per cent said they were “somewhat satisfied” or “very satisfied” with the Watch. This compares to 92 per cent for the iPhone in 2007 and 91 per cent for the iPad in 2010. Apple’s own market research has shown that 94 per cent of owners use and wear it regularly, if not every day.

Cook claimed the possibilities for Apple Watch are “enormous” and that excitement around the product will only grow with the launch of watchOS 2, expected early next year, as well as the addition of thousands of new applications to join the 8,500 already currently available.

The new operating system will provide owners with a number of new watch faces to choose from, as well as the ability to respond to emails and make purchases with store credit cards via Apple Pay, as well as being able to add reward cards.

Promise and potential
One new function will be Time Travel, which will enable owners to turn the Digital Crown to see what’s happened or is happening. For example, they will be able to see what the weather will be like tomorrow or to check a schedule for later today. Apple has also said apps will load faster and do more.

“Customer satisfaction is off the charts,” said Cook. “The opportunities for Apple Watch are enormous and that has been reinforced in just the first few weeks since it has become available to customers.

“For example, Nebraska Medicine, the latest hospital to adopt Apple Watch, has rolled out new apps to facilitate communication between patients and doctors, providing quick access to important charts and dosage information.

“This is just the beginning with what this new platform can deliver. With watchOS 2, developers will now have the ability to build richer and more powerful native apps to take advantage of the heart rate sensor, digital crown, accelerometer and more to usher in a whole new class of apps designed specifically for the wrist.

“It’s a rare and special privilege to launch a new platform with such promise and potential.”

Cook said Apple also plans to expand the availability of the Watch in the US before the holiday season due to the expected significant rise in demand from consumers, but didn’t provide any more detail.

“Even though the store rollout was delayed, we have learned a lot about the buying experience and based on that, we are now planning to expand our channel before the holiday because we are convinced the Watch is going to be one of the top gifts of the holiday season.”

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