Apple Inc. (NASDAQ:AAPL) has finally begun to accept preorders for the Apple Watch, the company’s newest device. Shipments for the Apple Watch will only begin on April 24, what’s on offer today at retail stores across the world is a preview of the company’s first release under the auspices of Tim Cook.
When Apple puts together a new product, the world sits up and takes notice. Wall Street analysts put their names on the line in an attempt to put a number on the sales that the company will secure in its first year on the market. The Apple Watch is coming, here’s how many of them the analysts reckon will be sold.
Apple Watch analyst roundup
The Bulls:
- Trip Chowdhry, Global Equities Research: 40 million in 2015
- Katy Huberty, Morgan Stanley: 30 million in 2015
- Rod Hall, JPMorgan: 26 million in 2015
- Timothy Arcuri, Cowen & Co.: 22 million in 2015
- Kulbinder Garcha, Credit Suisse: 20 million in 2015
- Ben Schachter, Macquarie: 20 million in twelve month
The Bears:
- Andy Perkins, Societe Generale: 8 million in 2015
- Gene Munster, Piper Jaffray: 8 million in 2015
- Wamsi Mohan, Merril Lynch: 9-13 million in 2015
The Undecided:
- Bill Shope, Goldman Sachs: 18 million in twelve months.
- Steven Milunovich, UBS: 16 million in 2015
- Abhey Lamba, Mizuho Securities: “mid-teen millions” in 2015
- Sherri Scribner, Deutsche Bank: 17.6 million in 2015
Apple Watch average selling price
For those following the success of Apple in terms of product sales,the numbers above should be enough to give an idea of the impact of Watch sales on the company’s share price in the months ahead. It does not, however, really give an insight into how much revenue Apple is likely to collect off of those sales.
The Apple Watch will sell for between $350 and $17,000. If Gene Munster assumes the company will sell 8 million gold Watches in 2015, that means billions in additional profit for Apple. Two key terms will be used to come to terms with the Apple Watch: Average Selling Price and Average Gross Margin.
Average selling price, or ASP, is the total revenue from the Watch divided by the number sold. Average gross margin, or AGM, is the total sales minus the cost of building the Watch, all divided by the cost of building the Watch.
Most analysts are sitting out their predictions on gross margin, Apple usually only reveals Gross Margin across the company as a whole making it difficult to attribute, but many had a guess at the ASP of the Watch. Here’s a look.
Watch Average Selling Price Projections
- Steven Milunovich, UBS: $430
- Timothy Arcuri, Cowen & Co.: $438
- Ben Schachter, Macquarie: $619
- Trip Chowdhry, Global Equities Research: $350+
- Gene Munster, Piper Jaffray: $550
Looking at the Apple Watch beyond 2015
There’s nothing that can kill the Apple Watch at this stage. With the lowest sales estimates coming in at 8 million the Watch will be a limited success at the very least. Some analysts weighed in on the future of the Apple Watch, its sales and its impact on the future of Apple as a company.
- Kulbinder Garcha, Credit Suisse: 30 million in 2016
- Steven Milunovich, UBS: 40 million in 2016
- Timothy Arcuri, Cowen & Co.: 7% of revenue in 2016, Approx. 45 million Watches
- Andy Perkins, Societe Generale: 19 million in 2016
There’s no analyst out there who thinks the Apple Watch is going to be a complete flop, or at least none that has been attached to a Wall Street bank. There’s some who think that the bullish case is overwrought, and others that think the Watch is a bad idea and will disappear from the Apple lineup eventually, but there’s none who think Apple’s future is at risk because of the wearable device.
By the end of the year, the Watch, which is launching in just nine territories across the world on April 24, is going to be huge, and it’s going to be seen on the wrist of almost every single celebrity. Let’s see which of the analysts get their sales numbers right.
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