While Apple (NASDAQ:AAPL) didn't release first-weekend Apple Watch sales on Monday, as it often does following the launch weekend of new iPhone models, management did provide some commentary on the new device during its second-quarter earnings call. Here are a few new quotes from CEO Tim Cook on Apple Watch worth pondering.
Initial customer response is very positive
There is currently a limited supply of Apple Watches, with estimated ship dates more than a month out for some who have ordered the watch. This makes gauging the device's sales potential difficult. Nonetheless, Cook still shared some thoughts on how the Apple Watch is performing in the market, saying the "response has been overwhelmingly positive."
Later during the call, Cook tried his best to answer a question about potential Apple Watch sales without mentioning any figures.
I'm thrilled with it ... so, I don't want you to read anything I'm saying any way other than that. So, I'm not sure how to say that any clearer than that. ... I feel really great about it. The customer response, literally, from what I've seen, is close to 100% positive. And, so, it's hard to imagine it being better.
The Apple Watch global rollout
Over a month after launch, the Apple Watch is in nine countries. While this initial availability is only one market behind the initial global rollout for the iPhone 6 and 6 Plus, the tech giant pushed the new iPhone models out to 37 additional countries and territories about a month after launch. The iPhone global rollout, therefore, was far more expansive than the Watch rollout.
Cook said a global rollout for the Apple Watch is still on the agenda. It will just take longer.
"I think we're in a good position and by sometime in late June, we currently anticipate being in a position that we could begin to sell the Apple Watch in additional countries," he said during the call.
The next phase of the Watch's rollout to new markets should come approximately two months after the first Apple Watch customers began receiving their products.
Apple Watch margins are lower
One key question going into the conference call was the Apple Watch's profitability. Apple is known for selling products with a significant up-front profit margin. Investors wondered: Could the Apple Watch live up to the company's 39% corporate profit margin?
During the call, Apple CFO Luca Maestri said margins on the Watch will be lower than the company average in the near term, citing the fact that it's an entirely new product in a new category, and noting its use of innovative technologies.
Cook explained later during the call that the initial lower profit margin for the new product is not out of the ordinary.
"In the first quarter with any new kind of product, you would always have learning and these sorts of things. We've had this with every product we've ever done," according to the CEO.
Overall, initial commentary from management suggests the Apple Watch business shows promise. While it might take a few quarters to get a better idea of the device's sales potential in the next one to two years, investors can at least rest easy knowing there was no mention of red flags, such as lower than expected demand, a higher than anticipated profit margin, or supply bottlenecks without solutions.