Wearables

To get a sense of what Apple's "wearables" business might look like, I think of:

1) the Watch as an iPod;
2) AirPods as an iPhone accessory; and
3) Beats as transient.

From that view, given that iPods sold about 40-50 million per year from 2006-2012, it seems plausible that the Watch could sell 40 million per year.  As noted before, the Watch is cheaper than most iPods were and is far more versatile than any except the Touch.

Airpods have a meaningful cost but are not outrageously expensive relative to other truly wireless headphones.  If I treat any headphones (including Beats) with a W1 (which is really the key to the AirPod) as being an "AirPod", I can imagine 10% of iPhone buyers also buying AirPods.  Approximately 200m iPhones are sold each year so this is about 20m AirPods a year.

I think Beats sales (actually, sales of all expensive large headphones, of which Beats is the largest brand) are a bit of a fad so, except for those that include the W1, I assume Beats withers away over time.

Based on this and an average Watch price of $300 (this excludes accessory sales) and AirPod price of $150, we see easily $3.7b per quarter in revenues without any significant advances over what is out there today (some incremental advances over time of course, but no sharp breaks).  Assuming that accessories, Beats, AppleTV and others in Apple's "other products" segment are non-zero, it seems reasonable to think there is well more than an additional $4b in revenue a year from the Watch and AirPods.  Or, as one might think of them, from the S and W series chips.

can't delete Apple Music?

Why does this Wired author assert that "You can't delete" Apple Music?  If Brian Barrett means "you can't go back to the old Music App", he's pretty wrong.  If he means you can't delete the Music App period, he's right but that has always been the case.  And I'm pretty sure he means the former as he seems to be lamenting the change from the old Music app.

For those who don't want Apple Music (I didn't - I was spooked by the lost songs/mixed up metadata problems and didn't think it likely I would use Connect), and who want to revert back to the old pre-Apple Music app, do the following:

1) go to settings>general>restrictions and scroll down to "Apple Music Connect".  Deselect Apple Music Connect and enable restrictions.
2) go to settings>music and deselect "Show Apple Music".
3) if you use iTunes Match, leave "iCloud Music Library" enabled to keep playlists synced and all music available on your devices.

And now you are back to your pre-Apple Music app.  No Connect.  No "New".  No "For You".  Just Music, playlists, and radio.  Just like before.

Is it a little inconvenient?  Absolutely - I needed to write a set of instructions.  Is it difficult?  Not really, the instructions had two (maybe three) steps.

Apple Watch sales expectations - UPDATED 1

I’ve revised my thoughts on how Apple Watch will sell.  My initial thoughts were that it would do okay but people would hold out for a next generation.  I think this is largely right but that I ignored a second set of buyers and so ended up underestimating sales for the first generation.  For many buyers, they will see the limited set of apps, unknown use-case, etc. and so defer.  However, I think a second set of buyers will snap this up – gift givers for whom these issues really aren't that important (because they don't need to use the watch).

There hasn’t really been an easy Apple gift for a while.  iPods and then iPads fit the bill as a gift but both markets saturated pretty quickly; how many of each can someone really use – especially as there weren’t big changes after a while?  iPhones are a tough gift as they either impose a subscription obligation or have a very high price tag (two years of service as part of the gift?).  Looking at Apple Watch, the wide price points make it a perfect “Dads and Grads” type gift and one that has more cultural resonance than iPods or iPads ever did.  As a luxury/signifier gift, the limited and uncertain functionality should not be a handicap.  Watches remain a common commemorative/notable gift and they are clearly not selected for functionality or practicality.

As a result, I suspect May and June sales are going to be far higher than expected at launch and that we will see unbelievable holiday sales in 2015 and 2016 (assuming a thinner version is launched in time for holiday 2016).  I'm going to guess 6 to 10m watches in May + June (and one week of April) but that 80% will be small Sports for a $400 average selling price.

UPDATE: Given the substantially delayed shipping times, I think a lot of potential gift givers will fall away as the shipping dates will miss graduation.  At the same time, the heavy load on the online store (which can handle probably 4m sales based on iPhone releases) suggests that there was a LOT of demand.  The store regularly crashed for me when checking order status (placing the order was fine though).  Finally, the significant shipping delays suggest there won't be much supply (if any) on hand in stores, further reducing sales.  So I think we are at the low end of 6m for the first quarter of release but only because of constrained supply.

iPad Mini Pricing

A fun data point to help think about the reasonableness of the iPad Mini's pricing.  The original iPod Mini (4GB, 1.67 inch grayscale 138x110 screen, 8 hour battery life, 3.6 oz) was sold through February 2005 for $249(!).  And people bought it like crazy.  It was expensive but people found a way to justify its purchase.  I suspect plenty of people will find a way to justify the purchase of the iPad Mini.