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Apple takes a slow, steady route with smartwatch sales

Fred O'Connor | April 15, 2015
Apple has deliberately taken a cautious approach to debuting its first wearable, preferring to see how people interact with the Apple Watch and ensure that the device meets the company's high quality standards instead of initially ramping up production.

Apple has deliberately taken a cautious approach to debuting its first wearable, preferring to see how people interact with the Apple Watch and ensure that the device meets the company's high quality standards instead of initially ramping up production.

On Friday, customers flocked online to pre-order the Apple Watch, generating a shipment backlog that quickly stretched into June. Pre-ordered Apple Watches were initially scheduled to arrive on April 24, the same day the device goes on sale. Last week, though, Apple said the Apple Watch can only be purchased online during its initial sales period, a time frame the company didn't define.

While some people may question if Apple underestimated demand for its smartwatch, Apple realizes the device is part of a new product category that requires a different sales approach, said Ramon Llamas, research manager for wearable and mobile phones, at IDC.

"To understand how best to sell this and distribute it, Apple want to take a very hands-on approach and make sure that they're the ones that are crafting the process and procedure of how to sell this to customers," he said.

For now, the watch can only be tried on at Apple stores and a handful of luxury retailers, including high-end department stores in London, Paris and Tokyo.

Cranking out Apple Watches and making them available from third parties that already sell Apple products, like Verizon, AT&T and Best Buy, wouldn't "be a recipe for failure," Llamas said. But that move would deprive Apple of important sales and marketing data from the watch's first buyers.

"Usually with any Apple product, if you are willing to be the first [buyer] and shell out this amount of money, there's a lot of information to be had on how to sell this correctly," Llamas said.

The Apple Watch's shipment delays could benefit competitors, especially with the backlog extended into June and possible longer, he said.

"This is a good time for all those other vendors not named Apple," Llamas said.

The buzz surrounding Apple's first wearable has increased people's interest in these devices. But consumers may not be willing to wait for an Apple Watch and could be turned off by its price, which starts at US$350 and can exceed $10,000. Instead, they may consider smartwatches from Samsung, Pebble or other wearable makers with products that can ship immediately and for a lower price, Llamas said.

The watch's backlog isn't a positive for Apple, said Ian Campbell, CEO of Nucleus Research, who doesn't believe the company is intentionally delaying shipments.

The backlog is tied to Apple's strict quality assurance process, which doesn't lend itself to getting products out quickly, Campbell said. And with the watch being a new product category, Apple is especially interested in selling a well-built device without flaws.

 

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