Though the mainstream media bias would have you believe otherwise, breaking research reaffirms the prior results that the Apple Inc (AAPL) Watch is winning.
The narrative was written before the product was even released — The Apple Watch was going to be a disaster. The data flew in the face of that narrative, but it didn’t matter — when the mainstream media decides something is a fact, it’s a fact. Or, we could look at actual facts. Here is gorgeous representation of the impact the Apple Watch had on the world of watches well back in 2015:
Just to be perfectly clear: Smart watch sales rose more than 4-fold just as Swiss watch sales started to dip. Again, throw out our biases – this is data driven. This was the first time ever that the smart watch segment sold more units than the Swiss watch market.
As for that 8.1 million units back in Q4 of 2015, yep, estimates have it that more than 5 million were the Apple Watch.
But that’s the past, and the narrative continued.
WHAT HAPPENED NEXT
After its first holiday quarter, sales of the Apple Watch declined substantially. There was no hair on fire product launch that was earth changing, or whatever else was the apparent measuring stick for success by the media.
We heard how much better the iPhone did than the Apple Watch upon first release, which was, also totally false. Apple’s iPhone sold a total of 2.3 million units in its first holiday season. In fact, here’s the all-time iPhone unit sales chart by quarter from Statista.
The Apple Watch sold 5 million units in its first holiday season, which is more than twice that of the iPhone on its release. Further yet, Apple Watch sold an estimated 11.6 million units in 2015 which wasn’t even a full year. The iPhone sold 5.3 million units in its first year. That turns out to be 117% greater sales from the first Apple Watch when compared to the first iPhone.
Going yet further, the iPhone sold 15 million units in its second year, and Apple Watch is estimated to hit 14 million. So, the Watch was keeping track. If these numbers seem like they fly in the face of the media coverage, it’s OK, they do. The facts rarely made it into that narrative.
Apple products are rarely big hits on first release. The first iPod was a dud, really. The first iPhone wasn’t a real success either. When Apple releases a product, it adjusts quickly and responsively. Its brand has a premium for exactly this reason. While Alphabet Inc (GOOGL) has monumental moat on the search advertising world that Apple can’t touch, this hardware and brand reality is one that Google cannot compete with.
Just to drive this point home, here are actual headlines from the mainstream media surrounding various Apple Inc (AAPL) products throughout the years.
Now we can fast forward to the news that broke today.
This comes straight out of an IDC research report — we are not adding any flowery language here, although we do add the emphasis by bolding the font type:
Apple Watch Series 1 and Series 2 proved to be a magnificent success for the company as it was the company’s best quarter ever in the wearables market.
The lower entry price point and the inclusion of GPS on the Series 2 along with a completely revamped user interface have helped the company grow its presence.
Apple is one of the few companies that has been able to quickly refocus its watch to gain traction in the consumer market and has also been leading the charge on introducing the smartwatch category to the commercial segment.
The Apple Watch’s third incarnation will possibly include LTE connectivity, which is a fancy of saying that it can be untethered from the iPhone and work as stand-alone device. That’s one rumor that was actually laid at the feet of Apple Watch 2, but didn’t quite play out. But the truth is, we don’t know what Apple will do with the new Watch, that’s why it will work — Apple Inc (AAPL) is ahead of the curve, not behind it. If there is success behind it, it will be a copycat — like Samsung and Google have done for years.
Whether or not the Apple Watch will turn into a blockbuster, which for a company the size of Apple would mean some number north of 50 million unit sales a year, nobody knows. But what we do know, what we have known, what we will always know, is that the narrative surrounding Apple products is rife with cognitive dissonance when in reality, they are predictable — they work, a lot.
The warbles segment is going to grow and when a company gets it right, it’s going to fill consumer market demand rise — just as the iPhone did for smartphones and the iPod did for digital music. A bet against Apple is OK, but it has never worked before.
The author is long shares of Apple Inc (AAPL) at the time of this writing.
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