Gene Munster thinks 2017 will be Apple Watch’s breakout year

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The Apple Watch may be a slow builder.

For all those people writing off the Apple Watch as a failure just a few months after its launch, Piper Jaffray analyst Gene Munster has a simple message: Slow down on the quick judgments.

In a new note to investors, Munster claims that the Apple Watch is doing about as well as he expected so far, but doesn’t predict that it will truly hit its stride until 2017 — when sales of the wearable device will be around 40 million units, or approximately 9 percent of Apple’s revenue.

Here are his full comments:

“We believe the Watch has been disappointing for some investors, but in-line with our expectations for a slow start. For Jun-15, we expect 3 million units. We believe that the slow rollout of supply (not available for walk-in buys until June) could be a headwind to the Jun-15 Watch number. In speaking to investors, we have been surprised at the level of concern around the long-term opportunity for the Watch. We continue to believe the adoption of the Watch will take place and remain confident that the CY17 will be the breakout year for the Watch as we units going to 14 million in CY16 to 40 million in CY17, accounting for around 9% of revenue in CY17. Our belief in the longer-term value in the Watch is driven by the eventual rollout of native apps starting later this year in V2 of the Watch software that will have greater and unique functionality compared to current apps that only mirror the iPhone.”

Apple won’t reveal exact Apple Watch sales during its earnings call tomorrow, but the company has already claimed it’s happy with how things are going. Although one recent report suggested sales have fallen by 90 percent since launch, a subsequent set of figures suggests that Apple has sold more than 4.5 million Apple Watches in just two months.

Munster’s own figure is 1.5 million units below this, but would still be enough to set the Apple Watch up as the best-selling smartwatch in history.

Personally, I wouldn’t be surprised if it took at least until year 3 (a.k.a. 2017) for the Apple Watch to take off. Although the iPhone today can sell well over 100 million units in a year, it also took a while to gain momentum.

By comparison with Munster’s Apple Watch figures, the iPhone sold 1.39 million units its first year, 11.63 million its second, and 20.73 million its third — considerably less than the figures Munster is predicting for the Watch.

If the Apple Watch does turn out to be an iPhone-sized “failure” for Apple, I’m sure Tim Cook will be crying himself to sleep. On a bed of money.

Via: Tim Bradshaw/Twitter

 

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