Did Tim Cook Really Dispute Reports of Poor Apple Watch Sales?
December 7th, 2016There’s a general perception that the Apple Watch hasn’t exactly taken off in a big way, at least not yet. I’ve never seen anyone wearing one. Or at least it wasn’t noticeable, not that I’ve gone out of my way to look.
In any case, IDC, part of the International Data Group that used to publish Macworld as a print publication, reported poor sales of the Apple Watch in the September quarter of 2016. Their surveys conclude that sales declined some 71% and it was the result, according to IDC, of an “aging lineup and an unintuitive user interface.”
Now I won’t comment on the latter, since I haven’t had enough experience with them to comment in a meaningful way. But watchOS 3, with loads of improvements, only shipped towards the end of that quarter, and the interface improvements may render IDC’s statement about usability moot.
It does make sense, though, for Apple Watch sales to be at a low ebb considering the product was first introduced in the spring of 2015. Anticipation of a new model could have also hurt sales.
Of course, we can only guess real Apple Watch sales. Apple buries the numbers in an “Other” category with other products on their financial statements. That decision was announced a the beginning; it wasn’t the result of any single unfavorable quarter. I suspect a lot of it had to due with the fact that Apple didn’t expect sales to take off very quickly. If sales were really terrific you’d see the numbers from Day One.
That’s just a theory, but why else would Apple keep the figures a secret? To spook Google and Samsung — or even Fitbit? Hardly. I’m sure they are perfectly capable of coming up with reasonable estimates of Apple Watch sales.
In any case, it’s clear that Tim Cook didn’t take kindly to IDC’s revelations, even tough they are probably correct. Instead, he wrote, in a statement to Reuters, that, “Our data shows that Apple Watch is doing great and looks to be one of the most popular holiday gifts this year. Sales growth is off the charts. In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product’s history. And as we expected, we’re on track for the best quarter ever for Apple Watch.”
Nothing in that statement actually refutes the IDC report, although some members of the media appear to believe he’s doing just that. Instead, it’s clear Cook is focusing on demand for the new models, introduced in late September, during the holiday quarter.
From my vantage point, I don’t think it’s quite enough. While it’s fine for fitness-related activities, I would be far more interested in an Apple Watch when it’s fully separated from the iPhone except when you need the larger display, or to use functions that don’t require conniptions with the interface. It’s not as if you can type a decent-sized message on one, though Siri works well enough for a phrase or two.
Regardless, it’s early in the game to fret over Apple Watch sales, or argue whether IDC’s estimates — and they are estimates — are correct, or whether Tim Cook is actually lying about how well it’s doing.
My good friend Kirk McElhearn has written a column on the subject at his Kirkville blog, and he clearly isn’t buying what Cook is selling about the Apple Watch. He concludes, “pay no attention to the man behind the curtain if he won’t announce sales figures. He’s just spinning.”
That comes close to saying that Cook is lying, because he’s asserting several alleged facts. So is “sales growth…off the charts”? Did it achieve record sales “during the first week of holiday shopping”? There is no middle ground here. He is either making statements based on actual sell-through or he isn’t. There is no room for equivocation.
Understand that Kirk has long been skeptical of what Apple marketing does. In the course of his regular appearances on my nationally syndicated radio show, “The Tech Night Owl LIVE,” Kirk has asserted that he believes Apple deliberately constrains production at the beginning of a product cycle so they can boast that demand exceeds supplies. I don’t pretend to have any insights about this, but when shipments are delayed for a few months. it has to hurt potential sales.
If you order an iPhone 7 Plus now, nearly three months after it was first announced, Apple is quoting deliveries by December 22, but that’s cutting it close. Why would Apple take such a chance if it wasn’t the result of higher-than-expected demand, or some combination of demand and production hangups? The MacBook Pro, announced near the end of October, is still backlogged by up to three weeks for models equipped with the Touch Bar.
Holiday sales are critical to Apple. It makes no sense whatever to hold back deliveries just to look good. Yes, Tim Cook wants to put a positive face on less-than-favorable news, but there is no actual evidence to disprove what he said about Apple Watch sales. He isn’t actually refuting the IDC report, only reporting preliminary sales for a different timeframe, the start of the holiday shopping season.
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“I’m sure they are perfectly capable of coming up with reasonable estimates of Apple Watch sales.”
So you reckon it is possible to do this then you should be in the analysis field in stead of writing and with that kind of knowledge I bet many manufacturers will be your clients.
“It’s not as if you can type a decent-sized message on one,”
Go to aa Apple Store and find out for yourself – I owned one, the watch I meant.
“That comes close to saying that Cook is lying”
I believe that TC has a fiduciary to tell the truth otherwise he can be charged for lying to the investors. So you still believe that that friend of yours is right.
“Kirk has asserted that he believes Apple deliberately constrains production at the beginning of a product cycle so they can boast that demand exceeds supplies. ”
Perhaps he too should be in the analysis field too because he will be great at it and look at the amount of spins these analysts are putting out for Apple and same as this friend of yours is doing.
Which company wouldn’t want to sell as many product as they can make any why should they constraint their own production to make themselves look good. Besides Apple need not constraints the production, all they need to do is constraint the supply. And they are in the position to do just that.
I bet he thinks he is very smart to spin his tales because one thing for sure Apple will never call him out.
You are making a few assumptions that are a little out there.
But you’re entitled to your opinion I suppose.
Peace,
Gene
I have the first version of Apple Watch, like it and use it. It is every bit an Apple quality device. If Apple does constrain supply at the beginning of a new product production run, my guess is it would be to ensure that there are no significant manufacturing flaws. I would consider this prudent if, indeed, it were true. Tim Cook has become everyone’s favorite whipping boy, but the truth is Apple products are still in great demand. He should get some credit for that, too. Of course, just my opinion. I could be wrong.
My, your friend Kirk says some stupid things. A certain percentage, (smaller than usual in Apple’s case), of deferred sales due to empty shelves turn into lost sales. Deferring production “for fun” is absolutely ludicrous, but to state it is par for the course in this day of click bait/fake news that is running rampant in today’s internet world. We love shit, and love clicking on it. Getting millions and millions of any product to market — across the entire globe — is an enormous job. Bugs are found in software, issues are found in hardware. You need to more than build it, you need to QA it and distribute it. You need to deal with the one component where the key supplier hasn’t been able to keep up or is producing poor quality. You need to dump inventory or re-run it when a bad component is found. I think Apple has done a pretty amazing job at this getting to sales of 75 million iPhones in a single quarter and without creating phones that are incendiary devices.
On the watch statistics, the key thing is that BOTH Tim Cook and IDC are correct. Very few people would have bought the old Apple watch when everyone knew a new model was coming. When it did come, sales were good — both are correct. The IDC number was completely predictable. The only a little bit surprising is that without the early adopter crowd that Apple had the best watch week of sales ever. That actually is news — the smart watch market is saying, “I’m not dead yet….I’m feeling better”. To boot, anyone suggesting Tim Cook is lying, despite his fiduciary duty to shareholders and the easier option to find numbers that tell positive stories that aren’t lies, is really the kind of complete idiot that we shouldn’t be wasting time publicizing. Sorry Gene, repeating stuff like that hurts your own reputation too.
“Anticipation of a new model could have also hurt sales.” Could have? Could have? You really aren’t serious in your choice of words are you? The question is not ‘could have’, it’s only ‘how much’. Since Apple doesn’t tend to overproduce, and doesn’t clear the channel with excessive discounting, but DOES sometimes delivers product later than intended, it’s quite normal to expect them to see severe year-over-year decreases when new models are expected to arrive in the next quarter. This has been observed for years with iPhone sales even when the product doesn’t arrive late. When you extend the delivery to a point where the product delivery seems so imminent, then the impact would be expected to be even stronger.
P.S. You’ve NEVER seen anyone wearing one? I guarantee that is because you are not looking. I’ve even seen one on a non-tech industry guest on Bloomberg TV wearing one. I’m sure I’ve only noticed because this is something I’m looking for. While I know I’ve seen thousands of watches over the years, I can’t say until now that I could tell you the brand of ANY of them simply because it’s not been something I’ve cared about noticing.
“I would be far more interested in an Apple Watch when it’s fully separated from the iPhone “. Why? I take my phone everywhere? That is tech writer geekery that doesn’t count in the real world where everyone has their phone within bluetooth distance. The tradeoffs you’d make would be poor ones given today’s functionality and battery life. The only exception would swimming and running – and here the watch is at it’s most useful anyways so I really think you need to spend some time with this technology to better understand it.
The watch has only one fault — it’s not the smartphone. It doesn’t change your life the same way. It does’t impact the tech world the same way or Apple’s bottom line the same wa. But, guess what? The smartphone was a one of a kind product, *everything* pales in comparison. If we compare the present Apple watch to a host of other gadgets instead, it’s been pretty damn useful …and pretty damn successful too.
You’re assuming facts not in evidence. When I say I haven’t seen anyone wearing an Apple Watch, I’m not referring to someone on a TV show. I’m talking about in person.
When I say “could have” hurt sales, I am speaking without actual stats one way or the other. I prefer to be cautious.
As for me, I would be more interested in an Apple Watch if it had a built-in cellular radio. But your priorities are your priorities. They may not be mine.
Peace,
Gene
Gene,
Yes, I do know you meant ‘in person’, seeing it on TV is even more unlikely in my mind — so that is why I mentioned it. I have seen many – perhaps at least 20 in real life (I work at a large financial company). But, I have been looking, and you perhaps have not. I don’t live in California or Boston/New York either. I’m in Canada, so if I’ve seen some amongst the polar bears I’m really surprised you haven’t seen one at all. I am definitely not assuming facts. The problem is my eyes are one data point, and yours are another. I can’t argue that you haven’t noticed one, I do trust your view as your fact. I hope you can respect me enough to know I’m relaying facts as well. I do believe the ‘noticing’ is the bigger factor here. I’ve also noticed how many people drive my brand of automobile after getting a car this spring. Amazing…and factual.
Everyone does indeed have different priorities, and I’m always interested to understand yours. Other than running/swimming, when you would like to have a cellular enabled watch?
You mean other than data and the ability to make and receive phone calls?
Peace,
Gene
Yes, outline the use cases (other the accepted ‘when running/swimming’) where a cellular connected Apple watch would be useful? I’m having honest trouble coming up with any common scenarios where my phone isn’t within bluetooth distance of my wrist. The only ones I can come up with is “forgot my phone” and “phone ran out of power”. For me, both of these are very rare occurrences that make the engineering trade-offs of a cellular-enabled watch undesirable.
I only came up with the ‘forgot my phone’ because I actually forgot my phone in the car the other day while at work. I felt ‘extremely naked’ without it, but was actually rather shocked to learn the wifi connection still allowed me to look at my news app, use Siri to create appointments, get iMessages, and even make FaceTime Audio calls. Not exactly the same as full cell service, but it was a little shocking to find I wasn’t half as disconnected as I expected with known wifi nearby.
Given the scenarios for me are so rare, I can honestly say that if I could choose an Apple watch that had independent cell service, but was thicker or had worse battery life, I would not choose it even if offered at no extra cost.
This is why a cellular radio should be an option rather than standard issue, as it is on the iPad. For those who want to be able to access cellular data or make and receive phone calls without tethering to a second gadget, Apple could offer that option. For those who focus more on fitness and swimming. it may not be needed. So you don’t buy such a product.
My wife’s iPad Air 2 doesn’t have the cellular radio. She’s only needed it on one or two occasions, where it was possible to use my iPhone as a hot spot for a short time.
Peace,
Gene
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