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Did Apple Watch Sales Really Exceed Expectations?

Keep guessing.


During Apple’s quarterly call with Wall Street analysts Tuesday, executives sought to control the narrative around the Apple Watch, which threatened to spin out of orbit.

The Apple Watch “topped our internal expectations,” CEO Tim Cook said, repeating remarks made to the Wall Street Journal and Reuters.

Yet, once again, Apple provided no numbers and reiterated that “demand outstripped supply.”

Since the April debut of the Apple Watch, the Cupertino technology giant has been tight-lipped about sales, offering vague generalities from Cook, who pronounced himself “thrilled” with the consumer response. Self-proclaimed experts stepped in to fill the information void, offering their own sales estimates.

Apple lumped sales of wearables like the watch into a catchall product category labeled “other,” which includes the Apple TV, the iPod, Beats headphones and Apple-branded accessories. Sales of this collection of products reached $2.64 billion in the quarter — a gain of $952 million from the prior quarter.

Unless there was a major sales decline of products in this category — and there very well may be — the numbers suggest Apple sold under $1 billion worth of watches since its launch on April 24, well below some projections by company watchers such as Bernstein technology analyst A.M. “Toni” Sacconaghi, who estimated revenue of $1.65 billion, or about three million smartwatches sold in this time period.

Cook sought to manage investor perceptions of the watch without disclosing actual sales numbers.

“We made a decision in September not to disclose shipments on the watch,” Cook said. “That was not a matter of not being transparent. That was a matter of not giving our competition insight into a product we worked very hard on.”

Cook, though, offered analysts “color” to avoid drawing the “wrong conclusion.” He said it would be incorrect to look at the sequential change in sales of the “other” category and conclude that nearly $1 billion number represents Apple Watch sales. Rather, sales of other devices, including the iPod music player, are shrinking. By how much is anyone’s guess.

In fact, Cook continued, Apple Watch sell-through was higher than the comparable launches of other first-generation products, the iPhone and iPad. Online demand was so strong that Apple was unable to sell the new device in its own stores until June.

“We feel really great about how we did,” Cook said. “Our objective wasn’t primarily sales. Beyond the very good news on sales, we’re very proud of how the product is positioned for the long term.”

So, how wrong were our back-of-the-envelope calculations? Apple offered no clue, while dropping another nugget of information. Apple CFO Luca Maestri said the Apple Watch accounted for “more than 100 percent of the growth in the ‘other’ category,” and helped to offset declining iPod sales, stopping short of providing a meaningful data point.

“We don’t intend to provide insight to help our competitors,” he said. Or the rest of us.

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