Apple Watch Sport. Source: Apple.
There seems to be a considerable degree of disagreement among Wall Street analysts and research companies when it comes to estimating sales figures for Apple's (AAPL 0.28%) recently launched Apple Watch. The bad news is that it's almost impossible to forecast short-term sales numbers with any precision.
The broad consensus is that Apple will sell between 20 and 30 million Apple Watch devices during 2015; however, forecasts from different sources vary widely. On the pessimist camp, research company KGI reduced its sales estimates last week to less than 15 million units because of disappointing demand. On the other hand, Morgan Stanley has recently increased forecasts from 30 million to 36 million units because of higher than anticipated consumer interest, according to its web search data analysis.
These are just a couple of examples showing how hard it can be to make sales predictions for Apple Watch in the coming months. Being an entirely new product category, analysts don't have any historical data to make comparisons and growth forecasts, so estimates are understandably quite uncertain. But the good news is, you don't really need to put too much attention on these numbers to tell if Apple Watch is a boom or bust.
Forget about short-term sales numbers
Wall Street and the media tend to put a lot of attention on short-term sales figures, but those numbers don't offer a long-term view. Sales over the coming quarters will depend not only on demand, but also on product availability in different markets. Besides, we need to give Apple Watch some time for consumers to interact with it and understand what it can provide in terms of experience and innovation.
As a reminder, the iPhone sold only 1.12 million units and 2.3 million devices during the fourth quarter of fiscal 2007 and the first quarter of fiscal 2008. Looking at those numbers, it would have been almost impossible to measure the iPhone's true potential over the years. For instance, Apple sold more than 135 million devices over the first two quarters of fiscal 2015.
What you need to watch
What really matters when evaluating Apple Watch performance and its potential over the long term is what the product can do for consumers. If Apple Watch can bring the right features to the table, consumers will want it, and Apple will gradually increase production and availability over time.
To begin with, a watch is a fashion accessory, and a very personal one. Functionality is undeniably very important, but Apple Watch needs to deliver on areas such as aesthetics or general coolness -- whatever that means to different consumers -- if it's going to be a success.
Apple Watch comes in three different models, two different sizes, and six different finishes, with a range of swappable bands and prices ranging from $349 all the way up to $17,000. When it comes to personalization, Apple is making a big effort to ensure the product offers enough flexibility and choice for all kinds of users. Apple Watch can be either a high-tech wearable device for sports and fitness fans, or it can be a distinguished luxury good to combine with high-end jewelry.
Regarding functionality, it's not only about what the product can do in terms of offering more functions than a smartphone. It's important to keep in mind that Apple doesn't just sell products; the company is in the business of providing experiences embedded in those products. If Apple Watch can deliver a unique experience, meaning a better way to do many of the same things you can do with a smartphone, this could be a powerful sales argument for consumers.
Also, Apple Watch could be a major game changer in areas such as fitness and healthcare. The device includes an activity tracker that monitors variables such calorie expenditure and physical activity. In addition, Apple Watch sensors can collect and supply apps with real-time data on physiological functions such as pulse and blood pressure.
It will take some time to clear regulatory hurdles and establish data reliability, but the benefits in preventive healthcare and diagnostics could be truly disruptive in the years ahead. Healthcare applications could move Apple Watch from a nice product to have to a necessary healthcare instrument for many people.
The main point is that sales figures in the coming months will not tell you what you need to know about Apple Watch and its long-term potential. Its attractiveness as a fashion product, the quality of the user experience, and its innovative contributions in fitness and healthcare are far more important when trying to tell if Apple Watch will be a success or a failure.
