Executives at Samsung must be pissed. The Galaxy maker beat Apple’s Watch to market by a year or more, but as soon as Watch was announced the smartwatch market dried up while everyone waited for Apple’s entry.
That was then and this is now and the nattering nabobs of negativism, all members of the technorati elite politburo– those who declared Watch DOA (dead on arrival)– have declared: 1) wearables are dead, 2) Fitbit and Xiaomi sell more wearables, 3) Watch doesn’t matter, 4) wearables don’t matter (until glasses and implants).
Get Over It
Here’s the deal for all who fail to heed how Apple plays by its own set of rules. Watch rules. No other wearable performs in the marketplace the way Watch performs. Marketshare numbers are not important. Of course cheap digital watches and cheaper exercise bands are wearables and of course they sell in greater numbers. Cheap rules, well, cheapness.
Just as it does with Mac, iPhone, iPad, and related Services, Apple Watch rules where it counts the most and every other manufacturer fights for the crumbs of second place, which, based upon recent guesstimates, is a tie for last place.
Only Apple knows how many Watch units are sold each year, but a year ago Apple executives pointed out that only Rolex made more money. And that was a year ago. Since then, Watch sales have picked up some steam thanks to the iPod Effect. Some in the guesstimating crowd think Apple may sell 15-million Watch units this year. Fitness bands and cheap digital watches may sell more. Samsung will sell far fewer smartwatches because only Apple has done it right.
So, let’s go with the conservative 15-million number. Remember, marketshare is unimportant as a metric because it deals only with units shipped, not units sold, not revenue, and not the all important profit metric. What’s the average selling price of Apple Watch? Only Apple knows, but guesstimates push it to the $450 level. That’s nearly $7-billion.
Apple’s average gross margins hover around 35-percent, so assuming Watch is similar, the device brings a few billion dollars to Apple’s bottom line. Guesstimators also say Apple could push another 20-million Watch units into the market in 2018, a 33-percent increase, so do the same math and you’ll see Apple has a $10-billion business on its hands.
What comes close?
Nothing. Not Fitbit. Not Xiaomi’s cheap knockoffs. Not Samsung. For at least this year and next year, Apple absolutely positively owns the wearables market; which, by the way, is expanded to include everything that you can stick on your body and uses electricity in a vain attempt to make Apple look bad because marketshare is being lost to Fitbit and Chinese exercise device makers.
Ignore those stupid and misleading headlines. Nothing is further from the truth. Apple owns the smartwatch industry, and Watch revenue, profits, and usability mean it owns wearables, too.