Apple Watch Sales: The Secrecy Conspiracy Continues
Apple‘s (NASDAQ:AAPL) unwillingness to share explicit detail about Apple Watch’s financial performance is a source of investor frustration. … As you likely know by now, Apple has said that the key reason for doing this is to avoid sharing any information publicly that competitors can take advantage of. …
All of this begs the question: What specific data point is Apple trying to keep from its competitors? …
The two basic figures that Apple reports for all other categories are units and total revenue, from which average selling price can subsequently be derived. …
Here’s my theory though: Apple desperately doesn’t want competitors to know Apple Watch ASPs. This is why it hides both units and revenue as best it can since those are the inputs to discovering ASP.
I didn’t buy this “competitive advantage” nonsense the first time around, and — misuse of “begging the question” aside — I certainly dont buy it now. Niu’s argument is essentially that Apple Watch’s average selling price (ASP) is somewhere in the neighborhood of $500, which is probably a bit conservative. Thus, he reasons that — should word of said juicy ASP get out to Apple’s smartwatch “competitors” like Samsung, LG, Motorola, et al. — Apple stands to invite competition at that price point, effectively reducing its own sales as other brands take risks on following Apple Watch’s premium, pricey jewelry aspect and make big inroads doing so. (I also find it somewhat incredible that anyone thinks these huge global tech firms can’t make a reasonably accurate Apple Watch ASP estimate on their own.)
Niu goes on to explain that the ASP of smartwatches in 2013 was $225 across 3.2 million devices, while in 2014, unit shipments went up to 6.8 million as the ASP dropped precipitously to a mere $189. Non-Apple smartwatches are clearly engaged in a race to the bottom. Somehow, however, Niu seems to feel that, should Apple reveal its own wearable’s ASP, it will embolden other makers to spend more time and money developing their own fashionable, expensive solutions.
That doesn’t really make any sense to me.
First, no other maker has close to the global style or fashion cachet that Apple enjoys. If a competitor wants to charge Apple Watch prices for non-Apple Watch devices, it seems to me that Cook and company would be thrilled at their competition’s wasted R&D expenditures and inevitable market volume failures. Indeed, it would rather be like Apple putting the screws to Google with iOS 9’s new ad-blocking capabilities. In short, there’s no competitive advantage to be had in Apple hiding Apple Watch sales numbers.
Except one.
And that’s the simple fact that, as fully expected by Apple at the outset, those sales numbers are low. Apple Watch is a long-haul device, and revealing slow sales might prompt two dramatically negative outcomes: First, the news could sour the public’s desire to own the device. Second, it could cause the competition to not invest heavily in smartwatches based on the logic that if Apple can’t move them at a high rate, no other brand has half a chance in the same market.
To me, the contingency that Liu and others say Apple is avoiding with its secrecy seems to be exactly the opposite: Apple wants its rivals to spend big on wearables because those rivals’ offerings won’t sell nearly as well as Apple Watch anyways, and that’s very good for Apple’s industry-cornering ambitions.
Big business isn’t just about beating your competitors at the retail shelf. It’s also about disrupting their financial roadmaps with clever gambits and misdirection, gutting their coffers from the outside.
Tim Cook is a sly devil.