Analyst: Apple Watch Pre-orders are Build to Order

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If you're wondering why no one received a firm April 24 delivery date for their Apple Watch pre-order, industry analyst Carl Howe thinks he has the answer: they're all being built to order. Instead of guessing which models to stockpile, he thinks, Apple is making the watches customers ordered.

Analyst: Apple Watch pre-orders are all build to orderAnalyst: Apple Watch pre-orders are all build to order

Apple Watch is Apple's entry into the smartwatch market. The wrist top device tracks health and fitness activity, links to your iPhone to display alerts, lets you reply to messages or answer phone calls, displays travel directions, and more.

Mr. Howe said in a blog post,

Apple is offering 38 different models of Apple Watch and it has no order history to go on. Instead of guessing at the right mix of models to manufacture, I believe that while Apple has manufactured a large number of Apple Watch electronics modules, it will perform the final assembly of actual products—the unique combinations of module, case, and band—to order. This approach will allow it to keep inventory costs low and satisfy as many consumers as possible.

If he's right, Apple will be able to avoid stockpiling watch models that aren't as popular while failing to keep up with demand for the better sellers. Using pre-order data, Apple can better decide which models to focus on when regular production ramps up.

Apple launched pre-orders on April 10, and within minutes was showing four to six week shipping windows. Half an hour after opening pre-order sales, ship times for many models were pushed out to June.

Apple isn't offering in-store sales when Apple Watch is officially available on April 24. Instead, the company will let shoppers try on models in its retail stores, then offer to help them place an online order.

The lack of in-store sales come this Friday fits nicely with Mr. Howe's theory. If Apple is building watches to order, there simply isn't any inventory to send to stores.

Mr. Howe's estimates put Apple Watch initial pre-orders up over 3 million units—a figure that towers over all other smartwatch sales. He expects that will add up to US$2 billion for the first two weeks of sales.

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If Apple really is using a build-to-order model for Apple Watch pre-orders, that would account for why we won't be able to buy on in stores come April 24. There simply isn't any inventory to send out to its retail locations.

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Comments

geoduck

That actually makes a lot of sense.
I expect that some analyst will however spin it as Apple not having confidence in the Apple Watch.

Bennyboy

No, that’s not it. Apple has decided for this launch, that they were having pre-orders that were made on the 10th shipped to the stores for personal pickup. That didn’t happen. For a lot of people, their watches weren’t coming till May or June. I believe that this was AA’s idea in her “One Apple” mantra. It sounded good on paper, you see the watch, order it and pick it up 2 weeks later. You don’t have to wait in line all night and settle for a watch that you really don’t like.  It didn’t end up working that well. The online store was bombarded and people’s ship dates went from April to June in minutes.

I think they allocated too few watches.
The made to order story doesn’t make sense since the bands are the real challenge to make. There are not that many different models of watch bodies.

Lee Dronick

Good point Benny, it isn’t like there are different RAM configurations for the watch. Anyway I would bet that by the time the Christmas shopping season opens that there will be watches stocked in the store. Then you can choose a band from the kiosk outside the Apple Store

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