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There is little doubt that the Apple (NASDAQ: AAPL) Look at the smartwatch product line has been a huge success for Apple. The company does not exactly divide the revenue generated by the product line, but IDC researchers said that by 2017, Apple had shipped 17.7 million Apple watches up 55.9% over to the previous year.
The category of products continues to have legs. During the July 31 earnings conference call, Apple CEO Tim Cook told investors that "Apple Watch" had recorded record results in June with a growth in order 40% ".
Image source: Apple.
Although the Apple Watch product category itself continues to grow, a recent report from Counterpoint Research suggests that Apple Watch buyers have not opted for the latest models of the company. Let's take a closer look.
Large majority choosing older models
According to Neil Shah of Counterpoint Research, the Apple Watch Series 1 – a version of the first generation of Apple Watch, but with the upgraded processor of the new Apple Watch Series 2 series – remains the most popular. [Apple Watch] model contributing nearly nine out of ten Apple Watch sold in the second quarter of 2018. "
Shah also said, "While this is great for Apple from the point of view of the ecosystem, the [average selling price] perspective this is not the same bump that Apple expects with the new iPhone models each year. "
What is happening here?
The Apple Watch Series 3 is obviously a much more technologically advanced product than the Apple Watch Series 1. In its evaluation of the Apple Watch Series 1, CNET has well summarized the differences between the two products: "Here's what you miss if you get a series 1 on a [Series 3]: GPS, swimming protection, brighter outdoor display, slightly faster speeds, slightly improved range and access to a few Wi-Fi streaming features on the application Music and Radio application. "
As for the price difference, the Apple Watch Series 1 starts at $ 249, while the Apple Watch Series 3 starts at $ 329, about 32% more expensive. If Shah's data is correct, most Apple Watch buyers simply do not value the delta of features between the Series 1 and Series 3 models to pay the extra.
Part of the problem, I imagine, is that the Apple Series 1 Series watch works perfectly for what Apple Watch buyers use (for example, check the time, track workouts, use a stopwatch).
Another thing to keep in mind is that a product such as the iPhone can legitimately be used as the main computing device for many. It can be used to browse the web, participate in social media, take photos, make video and audio calls, play more and more sophisticated video games, do business and more. It's a very versatile device that people use so much that they might be more willing to pay more for a better user experience.
Something like the Apple Watch, on the other hand, simply does not offer this range of cases of extensive use. To be honest, I think the vast majority of people would give up their smartwatches faster than their smartphones.
This could make potential customers less likely to spend more on a better Apple watch, even if they are the same types of customers who would find an interest in paying for more advanced smartphones. Hence the phenomenon described by Counterpoint Research.
Ashraf Eassa has no position in the mentioned actions. The Motley Fool owns shares and recommends Apple. The Motley Fool offers the following options: long calls from January 2020 to $ 150 and short calls from January 2020 to $ 155 on Apple. Motley Fool has a disclosure policy.
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