Yes, friends and neighbors, Samsung says its new Galaxy Gear smartwatch is the world’s most popular smartwatch. If you’re keeping score, and who isn’t, it’s Samsung 800,000, Apple 0. Two questions: Is it time for Apple’s iWatch? And, does anyone believe Samsung actually sold 800,000 watches?
Shipped vs. Sold
The latest news about Samsung’s conquest of the nascent smartwatch category has a familiar ring to it. Here’s the way it works.
Samsung announces a new product. Reviewers try the product and roundly criticize everything about it. Samsung announces spectacular sales results.
Later, after the dust has settled and reality sets in, market researchers quantify the difference between shipping, channel stuffing, and facts, vs. what Samsung’s PR department, adorned with an infinite number of monkeys who can type, says about the new product.
In other words, Samsung says sales, when what it really means is manufactured. Maybe they mean exactly the same thing in Korean.
the Galaxy Gear smartwatch is priced at about $300, which isn’t all that far from the price of Samsung’s much larger smartphones. That’s what I see as the biggest problem in smartphone accessories-as-watches.
Most of the big money in the watch industry is in the premium price range– $400 and above. Yes, you can buy plenty of watches for less, but that’s not where the revenue and profits are made.
Watches– those that help drive up sales, margins, and profits– are mostly in the premium range, and that is Apple’s strong suit. In other words, when Apple launches iWatch it will be a premium brand with a price tag to match. And that’s the problem.
Apple’s least expensive iPhone, the iPhone 5C, retails for about $550. Who is going to buy a watch that does less, but has a similarly luxurious price tag? And, can Apple make any money on a $300 smartwatch?
Alright, back to Samsung and the 800,000 Galaxy Gear smart watches sold in the firs two months. If that’s the actual number of watches sold– vs. manufactured or shipped– then I would say the smartwatch industry segment looks promising, but even if it sold 400,000 smart watches a month, that’s 4.8-million units a year, but barely a $1-billion annual business– about the same as Apple’s hobby, Apple TV.
There’s a reason Apple hired Burberry’s CEO Angela Ahrendts to run Apple’s retail business, and it’s not just to have someone make sure the Apple Stores are clean. Burberry is a successful luxury retailer. Apple’s products are decidedly in the premium-near-luxury category. That’s where future Apple products will live and prosper. Apple is ceding the middle and low end to anyone willing to lose the money.