Apple Watch demand not enough for suppliers to break even

Apple told investors earlier this month that sales of the Apple Watch have far exceeded its own internal expectations, but some of the companies that are making parts for the new wearable are claiming that they can’t even break even because demand is so weak. Taiwan’s Advanced Semiconductor Engineering (ASE) which makes the system-in-package case […]

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Apple Watch demand not enough for suppliers to break even

Apple Supplier Numbers Suggest Apple Watch Sales Are Below Analyst Expectations

We’re all curious about how many Apple Watches Apple has sold, but with the company opting not to break out its Apple Watch sales numbers, all we have to go on are analyst guesses, information distilled from third-party sources, and tidbits of data that Apple has provided.

The latest data that hints at how the Apple Watch has fared comes from The Wall Street Journal, citing shipment information provided by analyst Mark Li from Taiwan’s Advanced Semiconductor Engineering Inc. (ASE) most recent earnings call. ASE is the company that builds the S1 package housing the many chips and sensors used in the Apple Watch.

An ASE subsidiary reportedly failed to meet its „break-even volume“ of two million units shipped per month during the second quarter and does not believe it will meet that target in the third quarter, either. The company’s failure to meet this target suggests the Apple Watch „is not selling nearly as well as some analysts expected,“ says The Wall Street Journal.

„The shortfall of Apple Watch is a disappointment,“ Mr. Li wrote in a note to clients. „We came in with a low expectation but below break-even still surprised us.“

In an interview, Mr. Li said it is unusual for a company like ASE not to reach break-even volume during a typically busy period like the third quarter, especially when dealing with a new product.

He said that he now expects ASE to fall short of his forecast of shipping 18 million units this year, peaking in June.

Ahead of Apple’s recent earnings call, analyst estimates of Apple Watch sales during its first quarter of availability ranged from 2.85 million to 5.7 million, averaging out to 4.07 million. After the call, many analysts adjusted their estimates, with the consensus largely changing to between 2.2 and 3 million units sold. Estimates continue to vary, however, with Strategy Analytics suggesting Apple sold 4 million units in a recent report.

During the call Apple CEO Tim Cook said Apple Watch sales „exceeded [Apple’s] expectations,“ despite supply continuing to trail demand at the end of the quarter. „We feel really great about how we did,“ he said. Apple CFO Luca Maestri hinted current revenue from the Apple Watch was „well over“ $952 million, but he also did not provide insight into sales.

In the past, Tim Cook has warned against attempting to infer information from single data points from the company’s supply chain due to its complexity.



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Apple Supplier Numbers Suggest Apple Watch Sales Are Below Analyst Expectations

IBM to Purchase Up to 200,000 Macs Annually, With 50-75% of Employees Ultimately Switching From Lenovo

A year after teaming up with Apple on an enterprise partnership to push iOS devices and apps for business users, IBM is moving forward with plans to rapidly move its own employees onto Apple’s platforms, MacRumors has learned.

While IBM announced in an internal memo several months ago that it was planning to purchase up to 50,000 MacBooks for employees by the end of 2015, chief information officer Jeff Smith has revealed in a new internal video released to employees yesterday that he believes IBM could actually end up purchasing 150,000-200,000 Macs annually.

In the video, Smith relates a conversation he had with Apple’s chief information officer Niall O’Connor about the possibility of a massive Mac deployment for IBM.

„I’d like to be able to offer these to everyone that can use it. We’ve got to find a way to make the overall cost the same or lower than PCs to make that happen. Would you be interested in helping me do that, because you guys know these devices“, and he said, „No, Jeff, we’d never do that…very secretive, we never allow anyone in. You know, we just don’t do that.“

And I said, „Well who’s your largest corporate customer?“ And he said „Well, that customer has got about 25,000 MacBooks a year.“ And I said, „Well we could be 150-200,000.“ And he goes „Jeff, that’s a great idea! We’re gonna come here, you know, next week…you bring your whole team,“ and that’s exactly what happened.

In a separate clip from the video, Smith describes a recent conversation between Tim Cook and IBM vice president Fletcher Previn in which Previn indicated the initiative could see 50–75 percent of IBM employees eventually converting to Macs from the Lenovo ThinkPads that are currently the company standard.

Apple and IBM, former rivals in the PC market, have been working increasingly closely together on both specialized enterprise-focused iOS apps and more recently on HealthKit and ResearchKit data management tools. With so many IBM employees now in line to switch to Macs for their work machines, the stage is setting up for even more collaboration going forward.



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IBM to Purchase Up to 200,000 Macs Annually, With 50-75% of Employees Ultimately Switching From Lenovo