Can Ap­ple Watch sales reach 40 mln?

Financial Mirror (Cyprus) - - FRONT PAGE -

For the most part, sales ex­pec­ta­tions for Ap­ple Inc. (NAS­DAQ: AAPL) have been muted so far. An­a­lysts con­tinue to fo­cus on iPhone sales, which are by far the largest con­trib­u­tor to Ap­ple’s rev­enue. But as time passes since the launch of the smart­watch, Wall Street will keep a more care­ful eye on it, be­cause some­thing has to shoul­der the stag­na­tion, or drop, of iPad and Mac sales.

Ac­cord­ing to Bar­ron’s, Katy Hu­bert who is an an­a­lyst at Mor­gan Stan­ley, be­lieves Ap­ple Watch sales will reach 36 mln in the year im­me­di­ately af­ter its launch. Be­cause Ap­ple does not re­lease fig­ures on its smart­watch, fore­casts are noth­ing more than a guess, driven by small pieces of re­search that can­not be de­fin­i­tive. How­ever, should Ap­ple Watch sales reach 40 mln in the next year, it would be dif­fi­cult to claim it is any­thing short of a ma­jor suc­cess.

In its most re­cently re­ported quar­ter, Ap­ple man­age­ment dis­closed that iPad sales had fallen 23% to 12.6 mln in the same pe­riod the year prior. Mea­sured se­quen­tially, quar­ter over pre­vi­ous quar­ter, unit sales fell 40%. While the iPad has be­come a sec­ond-tier prod­uct for Ap­ple, its sales, at $5.4 bln last quar­ter, were 8% of Ap­ple’s rev­enue. As the num­ber con­tin­ues to slip, it has to be re­placed by iPhone sales or sales of the Ap­ple Watch. Rev­enue from Mac sales barely rose from a year ago, and it dropped by 19% se­quen­tially to $5.6 bln. Be­tween them, the iPad and Mac are nearly a fifth of Ap­ple’s rev­enue.

On the back of an en­ve­lope, for Ap­ple Watch to be a suc­cess fi­nan­cially and con­trib­ute to Ap­ple’s mo­men­tum, its rev­enue con­tri­bu­tion needs to be close to $5 bln. With an av­er­age price point of just above $500, that will be dif­fi­cult.

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