Do Apple Watch Sales Suck? Maybe Not

Supply sources say Apple Watch isn't meeting sales expectationsApple is dealing with weaker than expected Apple Watch sales and is cutting back its 2016 shipment forecast. That's the word on the street, but take it with a grain of salt because it's coming from parts supply chain sources.

News of Apple's scaled back smartwatch production comes via parts suppliers speaking with DigiTimes. Here's what the publication gleaned from the supply chain information it received:

 

Because of Apple Watch's weaker than expected shipments, Apple recently reduced the device's shipment forecast for 2016 down further from its estimate in the fourth quarter of 2015.

It's possible that's true, but building a tapestry with the threads from supply chain sources is fraught with peril. Even Apple CEO Tim Cook warned against it saying parts makers simply don't have access to the information they need to make their claims.

What we do know is Apple Watch inventory was hard to come buy at launch, but now it's easy to walk into a store and buy one without a wait. That says Apple's watch production is able to meet demand, which could mean people aren't buying or that Apple has been able to stabilize production. Regardless, Apple managed to take half the smartwatch market in less than a year and it's competitors haven't been able to make a dent in that lead.

The DigiTimes sources also say second generation Apple Watch production is scheduled to ramp up in the second quarter and that Quanta will be the only manufacturing partner. Apple hasn't said anything yet about when it plans to release updated Apple Watch models, or what features they'll include.

Apple's first fiscal quarter earnings conference call is scheduled for Tuesday afternoon, and while we won't get any numbers for Apple Watch sales we may get an idea as to whether or not the device is meeting expectations. Be sure to check in for TMO's coverage and analysis this afternoon.