Nobody expected Apple to tell us how many Apple Watches it sold last quarter. The company signaled last quarter that it would lump those sales into the category that includes the iPod, Apple TV, and Beats accessories. Cook also previously stated that there were competitive reasons for keeping the precise sales numbers quiet. Analyst estimates before Apple's earnings announcement hovered somewhere north of 3 million for the quarter, but it was expected that the most likely thing we'd actually hear from Cook is how delighted he is by Apple's customer satisfaction numbers. Cook loves saying "customer sat," and for good reason: Apple's performance there is uncannily good.
In an interview with The New York Times, Apple CFO Luca Maestri said that sales for the Apple Watch "sales in its first nine weeks exceeded those of the iPhone and iPad in their first nine weeks of availability." Apple itself said that the iPad sold 3 million units in the first 11 weeks, so that gives us some kind of ballpark. More specifics may be hard to come by, though. In Apple's press release, CEO Tim Cook said it was "a great start for Apple Watch" and also noted that watchOS 2 would come out in the fall.
One thing we can look at is the revenue in that "Other" category. As you can see in the chart below, Apple earned around $1.7 billion last quarter in the category. This quarter, that number jumped to $2.64 billion. That's a big jump, and though of course we can't say it's all due to the Apple Watch, that's going to be the thing everybody supposes until Apple tells us otherwise. Speaking to the Associated Press, Maestri said that Apple Watch revenue was "well over" the difference between those numbers — presumably because sales on the iPod were down last quarter. Maestri added, "We beat our internal expectations."
So it seems like a safe bet that Apple Watch revenue was over $1 billion.
But trying to map the delta in those revenues to Apple Watch unit sales is especially difficult. We'd need to know whether the price drop for the Apple TV made a difference, for one thing. The "Other" category also includes Beats accessories, though, so those sales factor into that final number as well. But most importantly, the price of the Apple Watch can vary so widely — from around $350 all the way up to the $20,000 range — that mapping revenue to unit sales seems like a fool's errand.
Bottom line: it's going to be difficult to pin down exact sales numbers without Apple giving us specifics. But beating the original iPhone and iPad in its first nine weeks is probably better than Watch pessimists had expected.
Update: Here are Tim Cook's comments on watch sales from the earnings call. Cook noted that June was the best month for Apple Watch sales so far, surpassing both April and May, despite reports to the contrary. His take on the "Other" category largely confirms what we were already thinking — Apple Watch sales account for more than that quarter-over-quarter or year-over-year delta, but exactly how much is still unclear.
As you know, we made a decision back in September, several months ago, no to disclose the shipments of the watch. And that was not a matter of not being transparent, it was a matter of not giving the competition insight, on a product that we worked really hard on.
However, let me give you some color, to avoid reaching sort of a wrong conclusion. If you look at the "other products" category and look at the revenue in this category, it would not be an accurate thing to just look at the sequential change or the year-over-year change and assume that were the total watch revenue. Because the aggregate balance of that category both sequentially and year-over-year is shrinking. Obviously iPod is a part of that, but there are other things in there — accessories and so forth — that are shrinking.
Secondly, to provide a bit more color. The sales of the Watch did exceed our expectations. And they did so despite supply still trailing demand at the end of the quarter. To give you additional insight, through the end of the quarter, in fact that the Apple Watch sell through was higher than the comparable launch periods of the original iPhone or the original iPad. We were able to do with with having only 680 points of sale. As you probably know, as I had reviewed earlier, the online sales were so great at the beginning, we were not able to feed inventory to our stores until mid-June. And so those points of sale, pretty much, the overwhelming majority of the low number of sales were not there until the last two weeks of the quarter.
And so as I look at all of these things, we feel really great about how we did. Now our objective for the quarter wasn't primarily sales. Beyond the very good news on sales, we're more excited about how the product is positioned for the long term because we're starting a new category. And as I back up and look at this with 8,500 apps, we've already announced the next operating system watchOS 2 — it will bring native apps, which are going to be killer, to the watch. Even though the store layout was delayed, we learned a lot about the experience. Based on that experience, we're now planning to expand our channel before the holiday. Because we're convinced that the watch is going to be one of the top gifts of the holiday seasons.
Most important of all of this is the customer sat is off the charts. We've constantly seen if you can get the customer sat off the charts, you wind up doing fairly well over time. We've also learned a lot about managing quite an assortment and so forth.
And so I back up and look at this and I feel fantastic about what the team has done and delivered and I know I never go anywhere without the watch and it's not because I'm the CEO. I'm that attached to it. I get lots of notes from a lot of people that feel the same way. That's how I look at the watch.
Verge Video: The Apple Watch review