Why the Apple Watch is a success



The Apple Watch has its fair share of critics. I’m one of them — the apps are awful — but I think Apple’s Q3 earnings report on Tuesday evening showed us that the Apple Watch is a success for the company, even if we don’t know exactly how many units it sold to date.

Apple CEO Tim Cook said that the company sold more Apple Watch units during its initial on-sale period than comparable periods for the first iPhone and the first iPad. That alone is an impressive figure and, by some estimates, it suggests that Apple sold somewhere between 2 million and 3 million units, though we don’t have a firm number from Apple yet since revenue generated by the Apple Watch falls under the “other category.” Even by those figures, however, sales are better than Android Wear’s initial debut. Research firm Canalys suggested in February that just 720,000 Android Wear units were sold in 2014.

Revenue generated in that “other” category is important, however. While the category includes the iPod, which was said to have decreased this quarter, it now includes the Apple Watch. Quarter on quarter, revenue generated from that segment increased from $1.7 billion to $2.6 billion, suggesting that the Apple Watch is already another $1 billion+ product for the company. What other company can create a billion dollar product so quickly?

And that figure is set to increase not only as more units are sold and future models are released, but as Apple opens up the Apple Watch to native apps in watchOS 2. Those apps will represent another revenue source for Apple; the existing app store is itself a multi-billion dollar industry.

And so while pundits sit here and wonder about the death of the iPad — sales are shrinking but Apple still sold 10.9 million iPads during the quarter, which is still a pretty stellar figure — it seems to me that the increased sales of the Apple Watch, which will also drive revenue from App Store purchases, helps offset any fears of shrinking iPad sales. (And let’s not forget the rumored iPad Pro might breathe fresh life into that category, too).

We can debate all day long about what the best wearable is or what smartwatch you should buy, and competition will always be important for any industry, but so far the Apple Watch — whether I like it or you like it or your uncle hates it — appears to be an early success for Apple.


By Technobuffalo