side 1 - the dark side
News can be crazy and confusing, it does not matter how serious or valuable a topic might be. It can be crazy, in politics, where Fox News reports questionable work, which (sometimes/mostly) should not even be consider journalism, because journalism should rely on facts, or when giving an opinion, labeling it as an opinion by a certain person, having a certain background. News Channels, like TV, Newspaper, Magazines, Blogs or Podcast have the jobs and the responsibility of informing their readership rather than simply pushing populist headlines.
In the technology sector, the most interesting topics evolve out of Cupertino. Cupertino, the magical place for Apple Inc., the most valuable technology company, the most valuable company in the United States, the most valuable company in the entire world. But the laws of the world seem upside-down in the Silicon Valley, normally when a company announces “a record-breaking quarter” the stock would go through the ceiling or at least increase, but when Apple announces “a record-breaking quarter”, it is possible that the market cap decreases after the announcement. That is the first sign, that Apple is measured by other standard than a “usual” Fortune 500 company.
Most companies, like Samsung or HP, don´t give a deep look in their earnings record, they give account of their revenue, profits and market expectations. They are not separating between the individual product lines, like smartphones, tablets, desktops, notebooks, services, or wearables. They not only not giving product margins, they are simply not giving any sales numbers of any devices they ship, and in some cases had not shipped, which makes it even more interesting. Apple does. Apple is not reporting individual product margins, but they are giving the amount of sold devices per quarter 47 million iPhone in Q3 2015, with a revenue of $31.368 billion in revenue. Second sign the different standards for Apple.
But it is not a surprise that Apple is not giving sales figure of the newly marketed Watch! In October 2014, Apple CEO Tim Cook announced that Apple would not be sharing that information of their wearable in the highly competitive market. The Watch is the category “Other Products” in Apple´s Q3 2015 Earnings Report, besides other products like the iPod lineup, TV or other accessories sold by Apple.
Concluding, when a news source claims, Apple is not reporting that information only due low demand of the new product, you can mark it as highly inaccurate.
side 2 - the bright side
Apple definitely did not have the launch, they planned or envisioned for their new products, mostly due to production problems, like e.g. not functional Taptic engines or low supply of certain leather and steel bands. Initially, Apple probably ordered about 5 million units, based on supply chain of Apple. But those numbers are not confirmed by Apple PR or any other Apple executive. Other sources and investors claimed, Apple shipped around 3 million units, which were coined as “highly inaccurate” by Apple CEO Tim Cook. Other sources claimed, that Watch sales were rapidly decreasing, which was dismissed by Cook with the comment, “On the Watch, our June sales were higher than April or May. I realize that's very different than some of what's being written, but June sales were the highest.”. It is unclear , whether Apple defines a sale, as the shipment of the unit, rather than the order of the product. Which would be logical, because Apple is not charging any Credit Cards until a few days before the final shipping to the customer.
Since we do not have any actual wearable sales numbers of the major players, Samsung and Apple, we can only look at reports of the overall wearable market estimations. We should be carefully looking at estimates, but it looks pretty favorable for Apple. A report by the trustworthy “Strategy Analytics” claims, that Apple´s market cap is already at 75.5%, claiming Apple shipped about 4 million units, which is questionable. The interesting point is comparing it with the Samsung estimate of 0.4 million units, and others, including Motorola or Pebble of 0.9 million units. Apple would have 75.5%, Samsung 7.5% and others 17.0% of the newly established market.
The only real fact, we can take from the numbers, is that every other company would be extremely happy to have a product like Watch in their lineup, because Apple´s “Other Product” had a estimated revenue of $2.641 billion, which is more than Microsoft´s entire revenue in Q3 2015 or Samsung´s handset sales.
And when we judge about Watch, we should remember that is a young product, and Apple is listening and learning from the requests of users like no other company. Looking in the future is like looking in a tunnel of light.
The future of the Watch is promising, with the release of of watchOS 2, developers will be able to ship native apps, which can already be developed. WatchKit allows rich applications without streaming the UI from the iPhone and having the the computing processing on the phone.
In the future, developers will also be able to use the integrated sensors of the Watch, like the gyroscope or the heart rate sensor. In addition, a framework called “ClockKit”, will enable developers to build small complications, which are going to be shown on the watch face. By combing Apple´s rich hardware and the extreme software capabilities, developers are going to be able to build marvelous apps, e.g. the charging status of an electric car, which is already pretty promising. But to take it a while step further, the user will be able to tilt the Digital Crown to accelerate the time, and the level of the battery will change, based on the predictions of the app, running on Watch. Neither, Samsung or Google offer comparable frameworks for developers, showing that Apple´s approach is more sophisticated and of a richer integration of both the very nice hardware with mindful sensors and the thought-out, future-focused software. This enables developers to serve a wider range of use-cases.
In the fall, we will know how much Watch can really do in the future and what Apple wants it to be for the user.