Throwing numbers around
The Macalope doesn’t know if an “iWatch” is being announced at Apple’s event on September 9, but he sure hopes so, because all this idle speculation is crazy-making. For the idlest of speculations, let’s go to the comedy troop known as the Forbes contributor network and Peter Cohan:
“Will iWatch Add $9 Billion To Apple’s Top Line?” (no link but tip o’ the antlers to Srini Addepalli).
You’ll never guess Cohan’s surprising answer.
Unless you guessed “no.”
The Macalope hates to get into a complex explanation of market forces, retail strategies, and demand curves, but there’s only one real answer to this question and that is this:
Seriously, maybe Apple has an estimate of how many it thinks it can sell, but it actually knows what the device does. The denizens of the seventh ring of hell commonly known as the Forbes contributor network do not.
I admire the way Apple AAPL used to innovate …
And, remember, it did so every 15 minutes.
Cohan goes on to list a bunch of analyst estimates for how big the smartwatch market might be if Apple enters it with this thing that no one knows anything about. To get a sense of how ridiculous these estimates are, Cohan quotes a Piper Jaffray survey … of 10 people.
Seriously with this?
In short, it looks like Morgan Stanley’s assumptions for iWatch sales would require Apple to instantly take over between 88% and 132% of the total wearables market if IDC is right.
I do not think this is plausible in any market.
Uh, well, except the tablet market. Where Apple initially captured 95 percent. The smaller the market, the easier it is for Apple to capture a huge share—at least initially—and the market for smartwatches right now is not big at all.
Nor do I think that Apple will take a huge amount of market share within a year of launch from rivals that already make very popular products.
Buh? Which products are you looking at? 2.7 million “smartbands” a quarter is not a big market and nobody considers these products well fleshed out. As much as Apple rumor mongers are pilloried for clinging to “iWatch” rumors, it’s Apple’s potential competitors who are dying for the company to enter the market and show them what wearables should be.
In short, the iWatch is all hype and no delivery at this point.
Of course, not hype generated by Apple.
I would be surprised if it becomes Apple’s next innovation yielding $9 billion in revenue.
OK, the Macalope has no idea how much an iWatch might make. But the iPad made more than that in its first 12 months. With $154 billion in revenue over the last four quarters, $9 billion isn’t a lot to Apple. And, it’s a heck of a lot easier for Apple to make that much off a device than it is for Pebble.
It’s dumb to say Apple’s going to make $9 billion off a device we know nothing about in the first 12 months that it’s out. But it’s equally dumb to say it won’t.