Apple Watch Fails to Reach Supplier 'Break-Even Volume' of 2 Million Per Month

POST

MAIL

Posted August 1, 2015 at 3:39am by iClarified

Sales of the Apple Watch have failed to reach supplier 'break-even volume' of two million units per month, reports the WSJ.

The news apparently comes from Taiwan's Advanced Semiconductor Engineering Inc., the company that is responsible for putting the watch's many chips and sensors into a small case, known as a system-in-package, or SiP.

Bernstein Research analyst Mark Li says that on a conference call, an ASE subsidiary told investors that it didn't reach its "break-even volume" of two million units per month in the second quarter. To make matters worse, the ASE unit doesn't expect to reach that level during the third quarter either, which is typically a busy production period before the holiday sales season. It wouldn't commit to reaching it during the fourth quarter either.

"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."

It's considered unusual for a company like ASE not to reach break-even volume, especially in the third quarter on a new product. Li expects the company to fall short of his previous forecast of 18 million units this year.

Apple has refused to break out sales numbers for the Apple Watch saying that it doesn't want to provide information that may help its competition. However, it did say that the Apple Watch sold better than internal forecasts despite limited supply.

Please follow iClarified on Twitter, Facebook, or RSS for updates.

Apple Watch Fails to Reach Supplier 'Break-Even Volume' of 2 Million Per Month

Follow iClarified

King Rollo - August 4, 2015 at 10:06pm

The break even has. Itching to do with the watch.. It has everything to do we what other device it can be used in and how well they can refine the production process... Apple watch outsold all android wear on day one.. It's not a sales issue..

Reply · Like

Zig - August 1, 2015 at 7:01pm

A 400$ useless device providing notifications and mirror screen from a cell phone with a 12 hours battery and 200$ wristbands. And you still need to carry the phone. You bet its not selling enough. Wow. Apple completely lost it. Thats sad.

Stealther - August 2, 2015 at 12:49pm

Totally agree. Bought an Apple watch and now collecting dust. Useless piece of device. I'm using my Mont Blanc watch agai

dkdk - August 2, 2015 at 9:31pm

I never end a day with less than 35% battery, and that's with 1.5 hours of exercise. Sport Band = $49. Use it for tracking exercise in addition to viewing notifications without having to take my phone out of my pocket. Use it to control remote devices while driving. It's not cool, it's a bit thick aesthetically for my tastes, but it's very useful and also fun. Like everything else in life, it is useless for those that don't need it, and useful for those that do.

Bigjiba - August 3, 2015 at 12:52am

That's some good feedback thanks. How is the heart rate accuracy

dkdk - August 3, 2015 at 10:27am

@Bigliba: honestly, I don't know... I've never compared it with another device.

King Rollo - August 4, 2015 at 10:03pm

Agree with that I get beaky 2 days and it's great!

gamerscul9870 - August 1, 2015 at 1:19pm

1. People wait for the second generation to come out (and looking at iPhone and iPad from that perspective, their sales grow the more new generations came out and continue to expand). I know the first time products don't always get the success, but it's no surprise here. 2. From how many have been sold, millions have preordered than the actual release of the watch. 3. Maybe the supplier couldn't do good just like GT with sapphire.

rahilxx98 - August 1, 2015 at 12:13pm

Def was a failed product when compared to the other successful Apple products. So I had one.... Got the sport model cause I enjoy running. Indoor running was a joke. It never calculated my distance correctly. The biggest disappointment was the way it looked..... It was so boring! Screen wasn't as bright as I was expecting, and after a few hours, I got annoyed of all my synced notifications. I'd rather just check my phone every hour, than have my "watch" buzz about every few min. Overall distracting. Forget reading, or listening to your professor, this thing will just buzz about unless you silence it, and well... What's the point of that right? It's a smart watch... All in all, it was. 3 out of 10 for me. I don't know about you, but I'd rather stick to traditional watches like my Tag Heuer Carerra.

dkdk - August 2, 2015 at 9:27pm

"Def was a failed product when compared to the other successful Apple products." That's kinda stating the obvious, given how you're defining success, isn't it? You could also say it was a staggering success when compared to Apple's less successful products. Look, this is an accessory, not a stand-alone device. It was never expected to have the sales volume of a primary device like an iPhone. Obviously a good chunk of iPhone users have no need for it, and/or can't afford the additional expense. But "def was a failed product"? Absolutely contradicted by reality.

Butterspider - August 1, 2015 at 11:19am

It hasn't sold the quantities because the price is ridiculously high. If apple makes the price more reasonable, people will flock to it. I have a pebble and love it. But if apple put the price in the under $200 range, i would put my pebble in a drawer and never look back.

Bigjiba - August 1, 2015 at 11:26am

Amen. Price has been a problem because of the expectation and competition. I'm sure the apple watch is high quality but people expected half the price. 399 entry price for men? Just for a rubber strap, easy to manufacture aluminum and no sapphire glass?. Come on apple. You know what is cannibalizing apple watch sales? The apple iphone. You think people will buy an apple watch over a 6s??? Price is to dangerously close.

gamerscul9870 - August 1, 2015 at 1:11pm

Or maybe some people waited for the second generation to come out, plus it's going to sell after a few years anyway because they eventually become cheap, plus I won Appl,e products before and I may someday win this.

JollySonX - August 1, 2015 at 8:23am

I know in the UK this time of the year is a quite sales time, kids have broken up for school and it's the busiest time for holidays, not sure on US term times but I bet they are close, not many people are wanting to waste there money on something like the watch when it can be a good chuck of a holiday ( I'm off to Spain for a week for £400 with the cheapest apple watch being £340 ) btw I own a apple watch, and love it.

Anonymous - August 1, 2015 at 7:41am

That is because who needs a watch that tells you notifications? Your phone is just in your pocket. You can just pick it out in your pocket and done. You don't have to pay another expensive thing just to tell you notifications.

dkdk - August 1, 2015 at 10:21am

I don't understand why people on this site keep making this comment... just because you don't wear a watch? Haven't you noticed how may billions of people do? You might not be aware that before the wristwatch was invented, people used to carry around a pocketwatch on a chain... then they realised that having it on their wrist is more convenient. Same thing here: I L-O-V-E not having to pull my phone out of my pocket to see what's going on.

Bigjiba - August 1, 2015 at 6:06am

Yup it's a failure. By consistent reports. In terms of smart watch sales it was ok just like the moto360 was ok at the beginning. I tell you what though. When they drop moto360 price I bet you the sales numbers were higher. They need to make the entry price much cheaper. No wonder they refuse to approve the Google android wear ios app. That would be the end of the apple watch if people had that kind of choice. But still failing in the smart watch category, every brand failed. It's just a niche product unless the price is at disposable level. 100-200usd.

Focus - August 1, 2015 at 11:08am

KrOO you need to have ball to accept the reality. Don't go crazy of apple. They are making billions of dollars from consumer like you and me. I don't know about your money but mine is hard earning money. Watch is the hobby things and people like to have classic watch like Rolex, Rado etc.. Apple watch is connecting to skin that means radiation connecting to body which is very bad for health. Do your self the favor and try to get educated. You have to do analysis different point of view in order to get correct picture. FYI..By the way I am the owner of many of Apple product and love them but not the Apple watch and never going to due to health reason. Hope this explanation change your mind regarding any company product.

dkdk - August 2, 2015 at 9:33pm

He didn't exist, until the Apple Watch radiation mutated his genes. ;-)

Tech Jedi - August 1, 2015 at 5:15am

The supplier had not met the break even point. The watch hasn't failed. I know a lot of people and friends who got the watch.

Shaun - August 1, 2015 at 4:17am

True. Price needs to come down and than you'll see the buyers

stevenlacross - August 1, 2015 at 4:16am

Yeah, I didn't get the watch, no one I know got the watch, haven't even seen it out in the wild yet at malls, stores, restaurants. I think it was a failure. I'm not interested in it either.

Great - August 1, 2015 at 4:01am

Firstly, WSJ has a crap history of Apple forecasts. Also ASE is but a small part of the supply chain and may not be the only supplier of that part of the watch. They will also be unlikely to be making anymore of that part if such a leak is true. And lastly, it may have been lost in translation that ASE could not supply enough of the 2 million required by Apple, and not the other way around.

gamerscul9870 - August 1, 2015 at 1:15pm

Apple did try to put effort into the watch but it just didn't sell because most people chose to wait for the next Apple watch to come out because they feel that the next generations of products always get the improvements just like the iPhone and the iPad, and if you look at it like that, it will eventually get the potential apple will eventually bring.

Tech Jedi - August 1, 2015 at 7:56pm

Apple watch owns 75% of the smart watch market. It's SUPPLIERS can NOT keep up with DEMAND.