Jul 21, 2015

    Jury's still out on Apple Watch's appeal


    IS THE Apple Watch a dud?

    Nearly three months after the launch of Apple's fashionably smart wrist wear, some analysts say it is not a mainstream mega-hit. But others see promise in its popularity with Internet-savvy young people.

    Media outlets last week jumped on a study by research firm Slice Intelligence suggesting that, based on a large sampling of online receipts in the United States, orders for the Apple Watch have plunged 90 per cent since the week that the wearable computing gadget made its debut. The estimate did not factor in data about Apple Watch sales at physical stores.

    It remains to be seen whether the famously tight-lipped technology company will provide insights into Apple Watch sales when it releases a quarterly earnings report today.

    While not sounding an alarm, BMO Capital Markets analysts put out word to investors that they were "disappointed" and reduced their estimate for Apple Watch sales in the coming year.

    They said that it was "nice to have but not a necessity, and is a bit hard to use".

    Richard Windsor at Edison Investment Research said that even if Slice is way off the mark about the drop in Apple Watch orders, it is clear the smartwatch has sold far below even conservative expectations.

    "My single biggest disappointment when the Apple Watch launched was Apple's failure to come up with a compelling use to which the device could be put," Mr Windsor said.

    "I think that this failing is the single biggest reason why the device is underperforming and why wearables continue to massively underperform the hype."

    However, Cantor Fitzgerald experts believe the Apple Watch will be a "go-to gift" during the year-end holiday season and become the best-selling new product in Apple's history.

    Global Equities Research managing director Trip Chowdhry has estimated that Apple could sell 20 million to 25 million of the watches in the final three months of this year.

    Jack Gold, president of research firm J. Gold Associates, said that it would be no surprise if Apple Watch sales momentum fell after the hype of it hitting the market subsided.

    "It's going to take another year or two, not just for Apple but for the market, to understand what it is that consumers really want these smartwatches to do for them. Apple will have to make some adjustments and I think it'll become more popular over time."