Tim Cook's Comments on Apple Watch Sales [Full Transcript]

Apple CEO Tim Cook offered extended commentary on Apple Watch and sales of the device during Tuesday's quarterly conference calls with analysts. The comments came in response to a question from Piper Jaffray analyst Gene Munster, and Mr. Cook goes to great lengths to explain why Apple Watch is doing very well without actually telling how well it's actually doing.

Apple CEO Tim Cook

Apple CEO Tim Cook

Here's the full transcript of what Mr. Cook said:

As you know, we made a decision back in September—quite several months ago—not to disclose shipments of the watch. That was not a matter of not being transparent, it was a matter of not giving our competition insight [on a] product 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 was total Watch revenue. Because the aggregate balance of that category, both sequentially and year-over-year, are 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, 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 a little additional insight, through the end of the quarter, in fact, the Apple Watch sell through was higher than the comparable launch period of the original iPhone or the original iPad.

We were able to do that with having only 680 points of sale. As you probably know, as I reviewed earlier, online sales were so great at the beginning, we were not able to feed inventory to our stores until mid-June. […] Pretty much the overwhelming majority of low number of [points of] sale were not there until the last two weeks of the quarter.

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.

As I back up and look at this, we have 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’ve learned a lot about the buying 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 for the holiday season.

Most importantly of all of this, the customer sat [customer satisfaction] is off the charts. Because we’ve constantly seen that if you can get customer sat off the charts, you can wind up doing fairly well over time. We’ve also learned a lot about managing quite an assortment and so forth…

And so I sort of 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 of Apple, I’m that attached to it. I get lots of notes from lots of people who feel the same way. That’s how I look at the Watch.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.