Apple will sell millions of Apple Watch units even as demand slides.
Bloomberg
NEW YORK (MarketWatch) | Published: Nov 14, 2014– Despite further evidence of a shrinking watch market, analysts say Apple has nothing to fear ahead of its smart watch launch this spring.
Apple will sell millions of units as expected, they say, even as the market for more traditional accessories (the wearables of yesteryear) continues to decline.
Morningstar consumer analyst Paul Swinand said he “rolls his eyes” at chatter of whether Apple Watch will be impacted by weak mechanical watch sales, or vice versa. Accessories, he said, have been losing steam for years. Watches have been in a decline for at least the last year and a half.
While traditional watch sales are expected to slow by another 3.1% to $63.9 billion globally this year, sales of wearable electronics are forecast to more than quadruple this year to $2.5 billion and rise to $8.5 billion by 2015, according to market researcher Euromonitor.
Shares of Movado Group tumbled 29% on Friday after it predicted further slowdowns in watch sales and axed its full-year outlook well below expectations. But analysts expect Apple to sell anywhere from 10 million to 50 million or more units in its first year.
“We believe consumers’ appetite for Apple Watch will surprise the skeptics next year,” Cantor Fitzgerald analyst Brian White said in a recent note to clients.The first wave of Apple Watch sales is expected to be comprised largely of early tech adopters and Apple loyalists. But even if fewer-than-expected units are sold, Pacific Crest analyst Andy Hargreaves said it would be less a function of weak demand and more a sign the technology failed to meet lofty expectations.
“If a slowdown in the watch market impacted Apple Watch sales, it would suggest the watch was failing its grander ambition,” he said.
If anything, Apple may have trouble entering such a fragmented market, Swinand said. There are dozens of smart bands on the market already, including Galaxy Gear, which is manufactured by Apple adversary Samsung Electronics. Several of them have flopped.
Of course, some of the slowdown in the traditional watch market might because some people are holding off for the Apple Watch and other similar smart bands.
But Bulova Corp. president Gregory Thumm in a recent email to MarketWatch was sure to distinguish between the two.
“Wearing a wrist watch is much less about timekeeping, than it is a cultural phenomenon,” he said. “It is like a neck tie or a handbag.”
