Welcome to 2015, the Year of the Wearable. Lets kick it off by taking a look at survey results out today from Quartz that say only 5% of US iPhone users say they’re very likely to buy an Apple Watch.
Another way to look at the survey is the numbers, and when I say numbers I mean show me the money. The problem is the only money numbers in the article about the survey were watch prices. Here’s a number I found by using the survey numbers and the comScore report cited in the Quartz piece: $1.4 billion.
The math: 176 million smart phone users, 41.9% iPhone OEM market share is 73.7 million iPhone users. Of iPhone users surveyed, 2.2% were extremely likely and 3.2% were very likely to purchase an Apple Watch within a year. 5.4% of 73.7 million iPhone users is just shy of 4 million Apple Watches sold in 2015. At $350 a pop that is $1.4 billion dollars in revenue from US Apple Watch sales in 2015.
Do I trust this number? Nope. These are back of the envelope calculations. Plus, the survey pool isn’t the best. The people who took the survey are SurveyMonkey Audience members which means they have signed up to take surveys on SurveyMonkey.com. Their responses may not exactly mirror what markets will experience in 2015. We will not know exactly what is happening when sales do start as Tim Cook said Apple won’t report sales of the watch. The year of the wearable will be full of analyst expectations and plain old guessing. That doesn’t mean the survey is completely useless and $1.4 billion is exactly loose change; people will spend good money for it.
“What is the most you’d be willing to spend on an Apple Watch?” The survey asks. So many surveys have asked a similar question and time after time the overwhelming majority will spend far less than the minimum asking price for the watch. This means Apple is presented with a challenge: convince consumers of the value the watch brings. Do that and that $1.4 billion goes up, way up. Apple cannot sell only watches; Apple must sell compelling, value-generating use cases for the watch.