Apple Watch


The heat is on for Apple Inc. and its smartwatch.

The company’s profits fell 22.5 percent to $10.5 billion for the second quarter ended March 26 as sales decreased 12.8 percent to $50.6 billion. The tech giant sold 51,193 iPhones, a decline of 16 percent from a year earlier.

Such declines — a rarity on planet Apple — increase the pressure on the tech giant to keep coming up with new offerings to engage consumers. The Apple Watch, which has received mixed reviews, is one such attempt to keep the momentum going.

Apple chief executive officer Tim Cook told analysts on a conference call that the unit sales of the one-year-old Apple Watch met expectations in the quarter.

Calling it an “increasingly essential part of users’ lives,” he said sales of the Apple Watch exceeded sales of the iPhone in its first year. Few expect the watch, though, to reach the iPhone’s lofty heights anytime soon.

The first iteration of the Apple Watch has been criticized for its battery life — generally requiring a fresh charge each day — and reliance on a tethered iPhone for much of its computing power.

The watch marks the first major product offering from the company since cofounder Steve Jobs died in 2011 and is seen as a major test for Cook, who repeated his boast that it was the “best-selling and most-loved smartwatch in the world.”

Cook said the company had learned a lot during Apple’s first year selling the Apple Watch. In a March event in which he introduced new watch bands and the new $299 starting price, Cook said one-third of people regularly change their Apple Watch bands. And in April, Apple continued and expanded its partnership with Hermès, with new bands colors and, for the first time, the ability for customers to buy bands separately.

The ceo said the smartwatch was expected to have sales that showed a seasonality that was comparable to that of the iPod.

While the company has not offered lots of specifics about the Apple Watch’s performance, vice president and corporate controller Luca Maestri noted that revenue in the“other products” category grew 30 percent, thanks to the Apple Watch.

He also noted that the Apple had expanded distribution of the watch to 60 countries and that customers reported 94 percent customer satisfaction.

Unsurprisingly, given the company’s high levels of free cash flow, Cook offered an optimistic note. “The future of Apple is very bright,” he said. “Our product pipeline has amazing innovations in store.”

load comments
blog comments powered by Disqus