Apple Watch. Photo: Apple

Demand for Apple's (NASDAQ:AAPL) latest product may be weaker than anticipated. Analysts at Pacific Crest lowered their estimate for Apple Watch sales, citing (among other factors) declining search volume. The Cupertino tech giant doesn't need the Apple Watch to be a massive success -- at least not this year -- but a disappointing reception could put pressure on Apple's valuation.

More people are searching for the iPod than the Apple Watch
Admittedly, it isn't the most scientific measure, but Google search volume can provide some insight into the buzz surrounding a product. "iPhone" emerged as a common search term shortly after its unveiling in 2007, and it has slowly grown in popularity over time. A chart of quarterly iPhone sales bears a striking resemblance to its search volume.

Apple Watch saw its search volume spike shortly after its unveiling last September, but has been on the decline in recent weeks. Notably, in May, "iPod" overtook it. As a product, the iPod has been in decline since 2008, and it could be discontinued at some point in the near future (Apple stopped breaking out iPod sales two quarters ago).

This observation, along with some supply checks and third-party data, prompted analysts at Pacific Crest to trim their Apple Watch sales estimates for fiscal year 2016. Previously, Pacific Crest had expected Apple to sell a total of 24 million Apple Watches, but now they believe it will only sell 21 million.

Apple Watch results will be bundled -- and concealed
Last October, during its quarterly earnings call, Apple's Investor Relations head Nancy Paxton announced that the company would be lumping Apple Watch sales in its "Other Products" category, alongside the iPod and Apple TV. Apple's CEO, Tim Cook, cited competitive reasons for its disclosure policy. Giving out exact sales figures, he argued, would benefit Apple's many rivals.

Apple's competitors have been similarly coy: Shortly after it released the original Galaxy Gear, Samsung said it had shipped 800,000 units, but declined to give exact sell-through figures. It's possible Apple's management could offer similar color (for example, despite not breaking it out regularly, Apple offers up data on the Apple TV when it breaks particular milestones), but investors will have to wait and see.  .

Reviews for the Apple Watch have been mixed. My Foolish colleague Evan Niu, a longtime fan of Apple products, returned his after just a few days of wearing it. The second- and third-generation Apple Watches should be much improved, but at least in its present state, it may not be capable of runaway success.

It's still all about the iPhone
As long as the iPhone business remains strong, Apple doesn't need Apple Watch. In fact, nothing other than the iPhone really matters for Apple -- record demand for the iPhone 6 and iPhone 6 Plus has propelled shares to new highs even as its iPad business has crumbled. And while Pacific Crest is cautious on the Apple Watch, they see even more upside for the iPhone: In June, they wrote that Apple could sell 50 million to 52 million iPhones in the third quarter, more than anticipated.

But Apple Watch remains a big deal in the sense that it's Apple's first major new product in five years. Even if the iPhone continues to generate billions, an Apple Watch flop could tarnish Apple's reputation for innovation, and threaten its multiple. Apple's current forward P/E ratio of 14 is far from excessive, but the last time Apple's reputation was called into question (early in 2013) it fell into the single digits.

AAPL PE Ratio (Forward) Chart

AAPL P/E Ratio (Forward) data by YCharts

That may not happen again, but investors should keep an eye on the buzz surrounding the Apple Watch.