The Apple Watch turned a year old on Sunday and like most one-year-olds, it’s hard to predict how successful it will be in the future.
But for what it’s worth, IDC estimated Watch sales of close to 12 million units in that first year. That’s about a $6 billion piece of business and would account for a global share of 61 percent of the smart-watch market, a market that didn’t even exist three years ago.
The Apple Watch is the first major product launch of CEO Tim Cook. Yet despite the numbers, most stock analysts and tech critics consider it a flop.
The complaints? Less than robust functionality, poor battery life and the required tethering to an iPhone have all hampered adoption. But if you believe the rumors, the Apple Watch 2 will have stand-alone cellular service to combat the required tethering and will feature a more robust battery.
But none of that seems to matter to the chattering masses of Wall Street analysts.
Remember how the iPhone was considered a major success when it debuted, with critics calling it another “home run” for the company and a “game changer” for the mobile industry? Apple sold about half as many iPhones in that first year, about 5.5 million units.
Apple reported its first revenue drop in 13 years yesterday and the Wall Street experts, who had been predicting the drop for weeks, lost their collective s—t.
“The Cadillac of stocks is now a Buick,” crowed one TV talking head. “Is this the beginning of the long, sad downfall for the tech giant?” asked another.
Apple shipped 231.5 million iPhones globally in 2015, compared with 192.7 million globally the year prior. One of the most common brow-furrowings yesterday came from analysts who wondered aloud why U.S. consumers are replacing their current iPhones at a slower rate than in previous years.
“A slower replacement rate means slower growth, and that is a disaster for a company like Apple,” one of CNBC’s guest analysts warned.
A disaster? Really? For whom? Certainly not Apple, which could argue that a slower churn rate from model to model is a sign that iPhone customers are happy with the performance of their older models and see no reason to replace them. That used to be known as a sign of quality manufacturing and thoughtful engineering — the kind that cultivates customer loyalty, which Apple has in spades. Now, according to Wall Street, it’s a sign of weakness.
The business of Wall Street is not to reward companies for consistent strength and innovation. The job of Wall Street is to make money off stocks. Analysts and brokers can’t give a crap about customer satisfaction and loyalty. They need churn. They need volatile stocks that will fuel their gambling game.
Apple’s market capitalization is north of $532 billion. The company has about $200 billion in cash reserves … $200 billion. Does that sound like a company in trouble? “Yes!” said Wall Street. “Apple has the cash to buy almost any company they want … so why aren’t they doing it?” sobbed another Wall Street TV proxy.
May I suggest, perhaps, that Apple is concentrating on its core businesses, already vast and diverse, and as Tim Cook said in his conference, taking aim at the many emerging tech-hungry markets still clamoring for their current product lines but, until now, unable to get them easily.
The absurdity of the panic over one down quarter for the most dominant technology company in the world underscores how divorced from reality the financial world is.
An 8 percent drop in Apple’s stock was the result of the hair-pulling yesterday, but one has to wonder how terrible for Wall Street that really is. Honestly, how many of these complainers would publicly admit that they shorted the stock and will make money on the downfall anyway?
It’s all part of the game, and consumers and workers be damned.
I’ve been covering technology for 23 years; it should be hard to get me to feel sorry for Apple, but yesterday’s stock market circle-jerk did exactly that. I’m rooting for the company, and particularly Tim Cook, more than ever.
Wall Street be damned.