Apple Watch may already be a $2 billion business


The first run of Apple Watches sold out via pre-sales before ever finding their way into stores, an achievement that a respected industry analyst says will make it Apple’s most profitable launch ever.

Carl Howe, technology analyst and Think Big Academy principal, stresses that he has no inside or proprietary knowledge, but has spent 20 years analysing the technology giant and has used public information to build predictive models about its business.

Apple has not released any information about orders placed since the Apple Watch was available to pre-order. However, it was widely reported as a sell-out as delivery dates for pre-orders jumped from a few weeks to several months.

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Howe is convinced that the initial production run of Apple Watch sold out; but admits there is no way of being certain how many watches that represents.

His analysis, though, is that the initial run of watches was more than 3 million units and will yield Apple Watch revenues of over $2 billion (£1.33 billion) for the first two weeks of sales.

Traditional watch giants Richemont and Swatch Group generated sales of $10.6 billion and $9.6 billion, respectively, for the whole of last year.

“While this figure is smaller than first weekend sales of iPhone 6 and 6 Plus, it dwarfs all other smartwatch sales to date and represents a milestone in wearable sales,” Howe writes in his blog.

The analysis model suggests that while Sport Watch will lead sales in volume, selling 1.8 million units in its first month, the mid-range Apple Watch will actually lead in revenue during that period, garnering about $900 million (£600m) versus Sport’s $675 million (£452m),” Howe continues.

The luxury Edition models, with starting prices of £8000 could generate sales of $500 million (£335m) in its first month from orders on 40,000 units, Howe estimates.

The gravy train for Apple doesn’t hit the buffers there. Once the company has crunched the numbers on the demand for its first collection, which extends to 38 different configurations, Howe thinks that it will begin increasing production for its most popular models.

That could lead to production of more than 2 million units per month during May and June. "I don’t believe that this increased production will satisfy demand however, and I expect Apple Watches to be on back order through much of the summer," he said.

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Rob Corder

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