Apple Inc. (NASDAQ:AAPL) may be followed by rumors about everything from a TV service to free trials of Beats Music, but the firm’s Apple Watch is still the premier growth driver in the eyes of many analysts. Apple won’t have a TV service ready for WWDC15 next week in San Francisco, so it will have to put the Apple Watch center stage at the expo. One analyst expects that’s just what we will see.
FBR & Co analyst Daniel Ives says that Apple Watch apps will be front and center at the World Wide Developers Conference in San Francisco. The event will begin next Monday, June 8 and run through Friday June 12. Mr. Ives says Apple will sell 20 million units of the Apple Watch in calendar 2015.
Apple Watch gets moment in spotlight
Ives says that Apple Watch Apps will be a focal point at WWDC, but reckons that there will be other distractions. He says news about new Maps, augmented reality, and Apple’s hopes in the car market are topics that might come up.
On the Watch the analyst says there is even “the potential for a native Watch developer kit adding another possible catalyst for more apps on the device over the coming quarters.”
A report released on Tuesday said that the Apple TV service was not going to appear at WWDC at all. That means the Watch will get even more attention. Peter Kafka over at Re/Code says that “the planned unveiling will be postponed because Apple has yet to finalize the licensing deals.”
that TV service is the other big project for Apple at the moment. If it’s not going to be seen at WWDC, that means that the Watch will get even more time in the spotlight. It may badly need the attention.
Apple may get almost all of its revenue from the iPhone, but the firm has made efforts to level that playing field. The Apple Watch is the latest attempt by the firm to launch a device, and it is the first new category since the iPad was brought to shelves in 2010.
Apple Watch margin trouble continues
The Apple Watch has not been the safe bet that many thought heading into the release of the device. Though Mr. Ives thinks that Apple will sell 20 million units of the Watch, Sanford C. Bernstein’s Tony Sacconaghi isn’t so sure.
He thinks that Apple will sell just 3 million units of the Watch in the current quarter. He says the average price for an Apple Watch will come in at a relatively high $575. Apple sells the Apple Watch Sport for just $349, while the Watch Edition goes for more than $10,000.
Margins are going to be low to start with according to Bernstein, but they will improve going forward. The firm thinks that margins on the Watch could hit around 72 percent if supply problems are sorted. In the next report from Tim Cook and Luca Maestri the gross margin on the Watch is expected to be just 30%.
Apple hides Watch failure, or success
Apple CEO Tim Cook said last year that he won’t be giving Watch sales figures out to the public, and the exec kept true to that in the firm’s first quarter report. Though there were no Watch sales in the first quarter, Apple usually reveals launch weekend figures.
Bernstein is looking to see a breakdown of the Watch category in the second quarter numbers, but they may be disappointed. Tim Cook did not say when, or if, the firm would let the world know how many Watch units are out there.
Mr Ives of FBR might be optimistic about sales numbers, and Mr. Sacconaghi may be less hopeful, but both may be disappointed when Apple releases it numbers at the end of July.
The firm refuses to disclose a lot of numbers, like the salary it pays Chief of Design Jony Ive, and it may see no reason to release Watch sales to the public next time it releases earnings.
Apple Watch needs a boost
The Apple Watch may not be a core of Apple business just yet, but the device is part of the firm’s hope for the future. Bernstein says that the firm is going to direct sales to the gadget in order to protect margins across the business while FBR is looking for the Watch to be a big sales force right away.
WWDC 2015 is going to be a major moment for the Apple Watch and the firm may even give some idea of the device’s install base next week. The firm’s developers will be central in getting the device to reach a big audience. WWDC is the time to reach them, and Tim Cook is sure to take advantage of that.
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