The Apple Watch may be many things, but now we know one thing it is most certainly not: a flop.
On Tuesday, Apple finally released revenue numbers — after a fashion — for its first wearable as part of its Q3 earnings report.
As expected, Apple slotted the Apple Watch into its "Other Products" category, which includes the Beats headphone business, iPods and Apple TV.
The total sales for the category — $2.64 billion — pale in comparison to the iPhone's $31 billion in quarterly sales. Even so, the number tells a tale. Here's what I was able to extrapolate moments after the release hit the wires.
If you do the math, Apple Watch just drove $1 billion in revenue for Applehttp://t.co/e5T1TB8fWm— Lance Ulanoff (@LanceUlanoff) July 21, 2015The revenue growth from Q2 to Q3 was $1.2 billion, a figure I ascribed to the Apple Watch. I was guessing that sales of the wearable had to account for the majority of the growth in a collection of products that had been seeing quarter-over-quarter declines.
On Twitter, and in the office, many observers felt I was assuming too much. Then Apple's CFO Luca Maestri said this: "Apple Watch accounted for more than 100% of the growth in the [Other Products] category and more than helped offset the iPod decline."
At that point, I started to dance around the office. My gut had been telling me for weeks that the Apple Watch was not a flop or even "floppish." Now I had proof.
Granted, $1 billion in sales might translate into a mere 2 million units sold, if you assume an average sales price of $500. The watch starts at $349 and can cost well over $1,000. But the overall unit sales number could be higher if you assume that the majority of customers bought the $349 Apple Watch sport.
In any case, a $1 billion business is nothing to sneeze at — especially when you're talking about a single product. As Apple was reporting its earnings, Microsoft was publishing its Q4 numbers, which included $888 million in sales for the Surface.
The Surface is an excellent convertible device and is experiencing torrid 117% quarter-over-quarter growth, but has taken years to finally get near the billion-dollar-a-quarter territory.
Apple Watch's out-of-the gate numbers are somewhat reminiscent of the first iPhone, which sold 1.1 million units in its first quarter in 2007 (ah, the days when Apple reported units sales for everything). Cook said in the Tuesday call that "through the end of the quarter, the Apple Watch sell-through was greater than [the] original iPhone and original iPad."
A fast start
So the Apple Watch appears to be off to a faster start than the incredibly popular iPhone, whichtook 74 days or roughly 10 weeks to sell a million units. The iPad, by the way, got off to an faster start too, selling a million units in less than a month.
Cook made much of the fact that Apple Watch sales were stronger in June than they were in April or May. Of course, that rise coincides with in-store availability. It will be interesting to see whether Apple can maintain that kind of sales momentum.
Not that Apple is leaving it to chance. Now that the company has solved supply issues, Cook says it plans on expanding Apple Watch channel availability — because "we're convinced the watch is going to be one of the top gifts of the holiday season."
He's probably right, especially when you consider what else Cook said about Q3 Apple Watch sales. Essentially, he told analysts it would be wrong to do simple math on the “Other Products” sales numbers to get at actual Apple Watch sales number, indicating that the iPod decline could be greater than a simple trend line might indicate.
That got me thinking: If Apple sold 3 million Apple Watches (a number on the high end of my expectations, but at least inching closer to some analysts’ outlandish estimates), it would account for $1.5 billion of the $2.6 billion quarterly revenue number.
That seems unlikely, but I don’t think anyone should peg Apple Watch sales at anything less than 2 million.
$1 Billion in sales and 2 million sold: That sounds like a hit to me.
Source: Mashable
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