Why Tim Cook Has Declined to Reveal Apple Watch Sales is Now Clear

Even before the Apple Watch first shipped, Apple's CEO Tim Cook announced that Apple Watch quarterly sales would not be broken out for financial analysts. At first that seemed overly defensive by Apple and worrisome to observers, but in time, we've seen how clever a strategy it has been.


At first blush, one would regard a company's decision not to reveal the sales of a brand new product category like the Apple Watch to be a sign of weakness. After all, if the sales figures look very bad, Apple could hide the numbers long enough to later ease themselves out of the market with a smile and a thank you. Demand just wasn't there. Moving on.

Much better is the notion of suppressing the actual numbers so that the competition wouldn't have a clear picture of the scope of their competition until it's too late.

I like that second idea because Apple is a company that's very good at analyzing its sales in terms of locations, outlets, and customer feedback. Just as Tim Cook brought a high level of sophistication to managing the supply chain under Steve Jobs, he also brings to bear careful attention to why (and why not) customers buy Apple products.

Part of this psychology has been the focus on the Apple Watch being a luxury brand, a product that appeals to customers with lots of expendable income and impulse buying habits. They are fashion conscious, and so signs of early, slow sales might cause customers to have second thoughts about their considerable expenditure.

Because Apple is good at analyzing customer purchase patterns and motivations and because the Apple Watch fits nicely into the existing Apple ecosystem, it's reasonable to presume that the popularity and sales will gain momentum over time, especially as the product improves in its technology and the competition is lulled into complacency.

The Signs

There are signs that this strategy is working. C|NET reported on February 18: "Smartwatches now more popular than Swiss watches, thanks to Apple."

Global shipments of smartwatches outpaced those of Swiss watches in the fourth quarter of 2015, according to figures released Thursday by market researcher Strategy Analytics. This marks the first time the wearable tech devices have overtaken their luxurious counterparts. Much of the credit goes to Apple, which the research firm says has dominated smartwatch sales since its release last April.

The Swiss watch industry has been very slow to react to the development of smartwatches...

Recall that some Swiss watch executives were dubious that Apple, a newbie, would jump into this market and outdo the experts.

While it's true that most traditional watch executives would publicly pooh-pooh the competition from Apple while privately rallying the troops to gear up for combat, it's also true that companies often find themselves outmuscled by Apple's R&D, become complacent or demoralized, or just don't have the in-house expertise to go toe-to-toe with Apple's software and hardware expertise. But if they saw, very early on, that they were being quickly squeezed out of the market, they might marshall the required resources.

Similarly, in the case of Apple's wearable competition, signs of difficulties are also starting to crop up. For example, Cult of Mac's Like Dormehl wrote on February 23, "Apple Watch’s biggest competitor is running into problems."

Fitbit stock dropped 19 percent today after its [sales] forecasts missed estimates, and analysts downgraded the stock as a result. Fitbit shares have declined 44 percent this year so far.

I wouldn't be at all surprised to see the Fitbit cave more deeply in the wake of continued technical development by Apple, just as, years ago, Apple put winning pressure on all those early MP3 players with its new iPod.

Estimated Shipments

The competition hasn't crumbled yet. Fitbit is still the market leader in wearables. But Apple sold, by IDC's estimate, 11.6 million Apple Watches in calendar 2015. (All the details are here in this 9to5Mac report.") And while some observers predicted a much higher number, or were disappointed in Apple's Christmas quarter and would suggest that Apple's 11 million unit sales in 2015 is a disappointment, remember that new Apple products have a history of gaining momentum over time. After all, the early part of the exponential curve is, by definition, fairly flat before it picks up steam on the rise. It happened that way with the iPhone.

In the end, it appears that Apple, in keeping the actual sales numbers close to the vest, has kept the smartwatch, luxury watch, and wearable competition mostly in the dark, delayed a panic with attendant all-hands-on-deck in Switzerland, avoided detailed, negative sales comparisons by the media, and largely kept the early sales numbers out of the buyer's mind as a factor.

One day, it'll be no surprise that Apple has gone from nothing to being the overall leader.

Oh, so quietly. Oh, so smartly.