HERE’S WHY THE APPLE WATCH IS A QUIET SUCCESS
You might want to rethink your position if you still think the Apple Watch is a op.
There are some who still think of the Apple Watch as a failure, and that Apple’s refusal to share sales numbers confirm that. However, there is overwhelming evidence to suggest that the Apple Watch has been a sleeper hit.
While Apple hasn’t revealed exact shares numbers, they have shared some stats and we have managed to learn much from them. During the Apple Watch Series 3 announcement, Apple CEO Tim Cook revealed that Apple has surpassed Rolex in terms of sales to be the number one watch brand in the world. Furthermore, Cook also mentioned that in Q2 2017, the growth of Apple Watch was up 50% year-over-year.
Earlier this year, Cook boasted that demand for the Apple Watch was so strong during the holiday quarter than Apple couldn’t make enough Apple Watches.
Market research rm Canalys estimated that Apple sold around 6 million watches during the holiday season and that generated over US$2.6 billion in revenue for the company. This would amount to nearly 80% of the smartwatch market for that particular quarter.
Another market research rm, Strategy Analytics, estimated that Apple shipped around 11.6 million watches for the whole of 2016, putting them comfortably in rst place as the best-selling smartwatch. They also believe that Apple has a smartwatch market share of around 55%, making them the runaway leaders in this category.
Comparing sales of the Apple Watch to Apple’s other devices like the iPhone and iPad would be missing the point. A watch isn’t a necessity like a phone is. Heck, look around you, how many people even wear a watch these days?
For a more direct comparison, consider that the Casio G-Shock, one of the most popular watches in the world, only recently announced that it has sold its 100 millionth watch. Incidentally, 2017 also happens to be the 35th anniversary of the G-Shock. It took the G-Shock 35 years to hit 100 million. Apple has already sold more than 10 million watches in just over two years.
Admittedly, for all of Apple’s successes, the Swiss watch industry remains largely unaffected. You might have read about Swiss watch exports dwindling, but this problem is mostly a self-afficted one and not one caused by the Apple Watch. Ineffcient distribution, ineffective marketing, a disconnect in prices, and many other factors, have caused many to question the value of plonking down a couple of thousands of dollars on a piece of metal, albeit an exquisitely crafted one. The uncertain economic climate and global outlook don’t help.
The thing is, the Apple Watch was never meant to compete against such watches. They might compete for the same real estate on your wrist, but the person who has been eyeing a Rolex Submariner or a vintage Patek Philippe ref. 2499 isn’t going to stop just because Apple came out with a smartwatch. The allure of mechanical watches is a whole other story best saved for another day.
Nevertheless, the Apple Watch has had a profound effect on what watch insiders call fashion watches. The Texas-based Fossil Group is the undisputed leader in this segment. It makes watches for a staggering 17 brands in total, of which 6 are its own (Fossil, Skagen, and Zodiac, just to name a few) and 11 are licensed (Adidas, Emporio Armani, Michael Kors, DKNY, Diesel, and more).
The day the rst generation Apple Watch went on sale on April 24, 2015, Fossil’s stocks were trading at over US$80 apiece. Right now, at the time of writing on the afternoon of 9 October 2017, it is just US$8.93.
Prior to the Apple Watch, Fossil also enjoyed five years of record revenues. It racked in US$3.51 billion in 2014. But in 2015, its revenue was down to US$3.2 billion, and by the end of 2016, it was US$3.04 billion. Profits have fallen even more drastically. In 2014, the company made US$377 million. It was US$220 million in 2015 and just US$79 million in 2016.
Fossil CEO Kosta Kartsotis admitted as much and said: “The introduction of technology into wrist devices, traditional watches came under pressure and we were disadvantaged. We didn’t have the technology capabilities to compete with smartwatches, leading to a decline in our market.”
Fossil is now doubling down on wearables and connected devices. At CES 2017 earlier this year, Fossil announced a new range of smartwatches and connected devices and also said that it now has 300 wearables within its portfolio of brands.
From the looks of things, Apple seems to have nailed down the formula for its smartwatch. The latest Apple Watch Series 3 is faster than before and now includes cellular connectivity - a feature that many users have yearned for since the rst Apple Watch.
Apple has also smartly decided to shift the focus of the Apple Watch to health and tness. If there’s one way to get people to wear a watch, it is to tell them that by wearing it you can be healthier and that you can live longer.
watchOS 4, the latest operating system for the Apple Watch, adds more detailed heart rate monitoring and can even detect if you have irregular heart rates. It has improved workout modes and GymKit, a new feature that lets wearers sync their Apple Watches with compatible gym equipment.
A long-term goal for the Apple Watch is to enable it to track your glucose levels using non-invasive methods. In other words, users won’t have to prick themselves to get a reading, which is typically the only way know to get a reliable glucose level reading. If Apple is successful, this would make the Apple Watch an invaluable monitor for users with diabetes.
The takeaway is this: the Apple Watch might not have enjoyed the same level of success as the iPhone or iPad, but it is still an immensely profitable device. More importantly, the Apple Watch has a lot of promise and I’m certain that it will only grow in stature and importance for Apple in the coming years.