Apple’s Watch may not be the runaway success some predicted, with one of the key parts suppliers for the company’s first wearable failing to break-even.
Unlike many other product launches from the iPhone maker, Apple has stayed quiet regarding sales of the Watch, although CEO Tim Cook did say that it beat the company’s own forecasts.
Now it seems that one analyst is predicting that sales of the Apple Watch may actually be dismal – with parts supplier ASE failing to break-even despite the new product launch.
ASE is responsible for assembling Apple Watch’s S1 system-in-package design and needed to ship two million units per month in the second quarter to break even. The company now believes it will not reach that level in the third or fourth quarters either.
While Apple Watch sales were said to have had a good start, some believe that since then sales have been on a sharp decline – suggesting only Apple’s most faithful customers purchased a smartwatch.
Tim Cook suggests that this is not true and that sales actually peaked in June when the Watch began to roll out to additional markets and retailers – including Apple’s own brick and mortar stores.
However, Bernstein Research analyst Mark Li believes that Apple may not be releasing specific numbers due to low sales.
“The shortfall of Apple Watch is a disappointment,” he comments in a research note posted on the Wall Street Journal. “We came in with a low expectation but below break-even still surprised us.”
Despite the confusion regarding sales, some analysts are optimistic – Canalys believes Apple shipped 4.2m units in Q2, while Ming-Chi Kuo suggests that Apple will ship 4m during the upcoming quarter.
Piper Jaffray’s Gene Munster is less optimistic; he predicts that Apple moved 2.5m Watches last quarter, with the company expected to ship about the same for the upcoming three-month period.
Of course Apple relies on several different suppliers, which is why the company suggests not reading too much into supplier comments, as no one vendor has a full picture of its supply chain.