Apple (NASDAQ:AAPL) Watch may decide whether wearables remain niche products or if they cross over into the mainstream.
This is a familiar place for the company which, it can be argued, brought tablets, smartphones, and even MP3 players to mass audiences. Apple was not first in any of these categories, but its success created widespread interest that led other brands into the space.
The same looks to be true with Watch, a wearable that goes beyond the fitness trackers that have paced the field so far. It's one thing to sell a FitBit (NYSE:FIT) or a Microsoft (NASDAQ:MSFT) Band to an athlete (or aspiring athlete) looking to track performance. It's another thing entirely to sell a wearable to people who lack such an obvious use for one.
Apple Watch is essentially an extension of the functionality of the iPhone in a way that adds convenience and a bit of added usefulness. That doesn't seem like enough to make the product a hit and launch a whole new category, but so far the numbers suggest it is.
Is Apple Watch successful?
While its initial sales were not as high as iPhone or iPad, according to research from Morgan Stanley (NYSE:MS), the post-launch demand for the Watch has been higher than its sister products. Ubergizmo examined that research and offered the following analysis:
The company tracked interest of the original iPhone, iPad, and Apple Watch in its first 5-6 weeks of launch and found that the iPhone managed to garner the most interest at the start, followed by the iPad, and then the Apple Watch. However as the weeks progressed, interest in the original iPhone started to decline rather sharply and around the fourth week, it was overtaken by the Apple Watch.
Apple Watch looks to be a slow build. That makes sense because iPod paved the way for iPhone which did the same for iPad. All were essentially extensions of functions or form factor of its predecessor. With Apple Watch, the company has a new product entirely where consumer curiosity is high simply because it's a new Apple product, but demand may track to word of mouth. As more people see their friends with the watch and experience it themselves, more will want it.
How big is Apple Watch in year one?
Apple Watch may outpace sales of iPhone in its first year. iPhone sales were around 5.4 million units in year one, according to Statista. Apple Watch, Forbes speculated, had preorders of around 2.3 million devices. Based on those numbers, and the continued interest detailed above, the watch should be on a faster sales pace in year one than the phone.
That's nice, but it does not mean that much because the market in 2015 is very different from the one in 2007 when iPhone launched. Apple has a cache now that it lacked when iPhone was released. The telling figure for Apple Watch won't be its first year sales since those will be powered by Apple fans who would buy anything the company releases.
The telling point for the success of the watch will be how it sells going forward, not its success with early adopters.
Will it be bigger than iPhone?
Early predictions suggest that Apple Watch may be a megahit extending its reach well beyond the strongest Apple devotees. The company could sell as many as 36 million smartwatches in the first year, according to revised predictions from Morgan Stanley analyst Katy Huberty, who is raising her Apple Watch sales forecast by 20% from the earlier figure of 30 million CNET reported.
That blows early iPhone sales out of the water and suggest a strong future for the watch.
It's too early to predict that Apple Watch will be bigger than iPhone and one huge hurdle exists that could prevent that. As of now, Apple Watch cannot do many things unless it's paired with an iPhone. That inherently means it will be smaller than its sister product.
Still, this initial success could lead Apple to decide to make the watch more functional on its own, which may open up bigger markets. It still seems unlikely that it will be bigger than iPhone but it could be very big.
Daniel Kline owns shares of Apple. He does not wear a watch but has stopped himself from ordering an Apple Watch more than once. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.