In early October, I interviewed Horace Dediu, a Romanian-American tech analyst based in Finland who focuses on Apple products, as part of a larger story I was working on about watch brands that sell more than $1 billion at retail annually. Apple had just released its new Apple Watch Series 3, a model boasting cellular functionality, meaning it no longer needs to be tethered to a phone. Dediu and I spoke about how well the watch has performed, how it might evolve, and whether or not Swiss watchmakers should fear for their livelihoods.
Is Apple now the world’s biggest watchmaker by volume?
Apple doesn’t give specific numbers; they give you iPhone numbers and Mac numbers, but they’ve never actually given specific units or sales numbers for the Watch. They claimed at the last launch event that they overtook Rolex sales by value, not by units.
I looked up Rolex sales, which were [estimated to be] $4.7 billion in 2016, including service revenue. We don’t know whether the number was up or down, but I used that 2016 number suggesting that Apple’s would be above $4.7 billion.
My expectation is Apple is running at about $5 billion a year and, as a result, they’re number one. And they launched the Series 3, which has a new feature of being a wireless phone as well.
How is the Apple Watch performing overall?
If you follow Apple and the history of the iPhone and iPad, you know these products took off like rockets. The Watch hasn’t been quite that, but it hasn’t been a flop either.
How does it scale? How do we measure success in this market? Only iPhone users can use it. It’s very much an accessory product. It lives under the shadow of the iPhone.
But the iPhone was in the shadow of the Mac in the early years. There’s a chance this baby product will grow up to be a more mature product, which will place it in more direct competition with the traditional watch market.
If you look at the Apple Watch, it probably crossed over 30 million or 33 million [unit sales]. Give it another couple years and it will probably be at 100 million. After six to seven years, it will probably be the bestselling watch of all time, as well as the top-selling brand.
Who’s buying the Apple Watch?
We’re seeing a lot of people in service positions—flight attendants, people in the hospitality sector, and people in security (both TSA agents and in passport control). I see a lot of people who might not be considered tech or luxury people but who need this watch because they can’t pull their phones out. They can still get their texts without interfering with their jobs. There’s no product that comes close to offering these kinds of alerts.