Apple Watch, by most early indications, is an abject failure. But, that’s okay because, if you’re an Apple (AAPL) investor, you literally shouldn’t care.
The Apple Watch was never going to be able to drive meaningful growth for AAPL stock this year, although many readers disagreed vehemently and let me know in the comments when I made that exact claim back in April.
We have to realize: Apple Watch’s poor showing since its debut is almost a non-event from an investor’s standpoint. I’ve owned AAPL stock for many years, and I can assure you: I don’t own it for the Apple Watch.
With AAPL stock up 12% in 2015 and 28% in the last year, the company doesn’t need a redundant smartwatch to keep growing, despite all the hype the new timepiece got in the media leading up to its release. Here’s what I mean when I say that Apple Watch failed — and that it doesn’t matter.
Apple Watch Sales Down 90%
AAPL CEO Tim Cook isn’t breaking out the numbers for the Apple Watch, but according to analysis from Slice Intelligence, sales are down 90% from the opening week. The watch launched on April 10 to sales of about 1.5 million units, but U.S. sales have since fallen to less than 20,000 — and sometimes less than 10,000 — per day.
Of the sales to date, Slice estimates that two-thirds have been for the Apple Watch Sport, the cheapest version that begins at $349.
Wednesday, Edison Investment Research analyst Richard Windsor said that “sales of the Apple Watch have been far worse than even Edison’s bearish predictions.”
A few months ago, I was of the opinion that Google (GOOG, GOOGL) could make a big splash in the smartwatch market later this year when it debuts its luxury smartwatch, a fascinating collaboration between Google, Tag Heuer, and Intel (INTC).
Today, with less than 2,000 of AAPL’s high-end $10,000-plus Apple Watches having been sold, I don’t think you can successfully go high-end in the smart watch segment.
The only company with dominant wearable product sales right now is Fitbit (FIT), the smart wristband maker that tracks fitness and health metrics.
Bottom Line
AAPL’s strongest product is still the iPhone, which last quarter accounted for $40.3 billion in revenue, or nearly 70% of the company’s sales. Yesterday, Canaccord Genuity‘s T. Michael Walkley raised his forecasts for iPhone deliveries in fiscal 2015 from 226.6 million to 235.2 million on the basis of channel checks.
That’s the sort of thing that gets me jazzed about AAPL stock, but it’s not the only thing. After selling Netflix (NFLX), Carl Icahn called AAPL a Netflix-esque opportunity; I think Apple Pay will continue to grow, I expect Apple TV to be big, and Apple Car will create immeasurable opportunities five years from now.
AAPL stock is a buy in its own right. We don’t need to spin it as an Apple Watch fairytale to justify it.
As of this writing, John Divine was long shares of AAPL stock and FIT stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
