Is Apple Watch Really a Flop?

Apple Watch display

It has been just over a year since Apple started selling Apple Watch, the personal device it has ever created. Since the launch of the Watch since September 2014, people have been fixated on why Apple Watch will fail or is a flop.

According to IDC, Apple may have shipped 13 million units in 2015, which makes it a $6 billion business.

IDC Smartwatch - Apple Watch sales numbers

iPhone vs Apple Watch

The problem is people try to compare the Apple Watch with the iPhone, so in relative terms, it does seem relatively small as Apple shipped more than 200 million iPhones last year. But to get some perspective, if the numbers are accurate, Apple shipped twice as many Apple Watches as iPhones in its first year.

Apple Watch also grabbed 61% of the smartwatch market share, which is quite impressive. In comparison, iPhone had grabbed only 1.1 percent of the cellphone market share by the end of 2008. So there was a huge opportunity to make inroads in the market.

Challenges

It highlights that the smartwatch is a much smaller market, so you can’t compare the performance of Apple Watch with the iPhone. In relative terms, Apple Watch has done much better in its first year of launch.

But it is very difficult if not impossible to be able to grow at the same rate as the iPhone. Unlike the iPhone or smartphone, the Apple Watch is not a must-have. And the $299 price tag for the entry-level model isn’t cheap. You also need an iPhone to use an Apple Watch.

What Next

If Apple wants the Apple Watch sales to grow, then it needs to come up with new models on an annual basis and needs to keep adding new features like always-on display, sleep monitoring, improved battery, cellular connectivity (rumored in Apple Watch 2) etc. which convince people that it is a must-have.

It also remains to be seen if Apple will allow Apple Watch to connect with Android based smartphones, as that seems like an easy way to expand the market. But I would be very surprised if they do as it would come at the cost of losing the stickiness of the iOS platform.

Apple seems to have become a victim of its own success. We forget that the Apple Watch is just a first generation model. Apple will continue to launch new versions of the device, and with time could become an indispensable device. The way I see it, the Watch is an accessory for the iPhone, and the revenue that it is generating is incremental revenue. It adds stickiness to the iOS platform.

It is far for being a flop, and it is based on numbers and not people’s opinion.