Despite Apple CEO Tim Cook saying demand for the Apple Watch is far exceeding supply, some analysts believe Apple's latest product is not as hot as the company and its fans make it out to be.
In a note sent to clients, analyst Andy Hargreaves of brokerage firm Pacific Crest said he was reducing Apple Watch sales expectations for the current fiscal year by half a million, taking the number down from 11 million to 10.5 million.
While this may not seem like a huge reduction, Hargreaves said he is expecting a more drastic letdown for fiscal year 2016, during which he believes Apple will sell only 21 million units of the Apple Watch, far less than the 24 million he earlier made.
Although the initial feeding frenzy succeeding the device's April launch will help Apple meet the 5.5 million sales Hargreaves predicted for the fiscal quarter from April to June, he thinks Apple Watch sales will likely take a hit starting September and will continue to decline in the following months due to "soft follow-on demand."
"Anecdotal evidence suggests Apple Watch demand is slowing quickly," Hargreave noted. "Reviews of the device have been mixed, the fashion angle appears to be leaning a bit too much toward 'calculator watch,' and general consumer interest as measured by search volume is below the iPod."
Upon checking how many users are searching for the Apple Watch on Google, he discovered that more users are searching for the iPod. To him, this is not a good sign, since a product that is supposed to be on the brink of extinction seems to be more popular than a new product that is being marketed as the next big thing from Apple.
He also said that decreasing store visits, third-party data and recent supply checks contribute to the cut in his forecast for the Apple Watch.
Hargreaves is not the only analyst who thinks the Apple Watch is getting more hype than it deserves. In May, research firm UBS said it was cutting its demand forecast for the Apple Watch for fiscal year 2016 by as much as 23 percent to 31 million due to "tepid interest" from the general consumer market. In a note sent to clients, UBS said initial interest for the watch was a mere 20 percent of the interest received by the first iPhone in 2007.
Even then, Hargreaves remains optimistic about Apple's profits for the current and next fiscal years, pointing to the iPhone's continuing popularity, which still generates around 70 percent of Apple's total revenue, as the reason for Apple's continued growth. Hargreaves, in fact, raised his estimates of iPhone sales from 229 million to 236 million for 2015. In 2016, he expects Apple to sell 218 million iPhones, 10 million more than his initial forecast of 208 million.
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