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Apple watch deliveries delayed despite scarce crowds at stores

Saturday, April 11, 2015 - 07:08
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Few people lined up at Apple stores from Beijing to New York to get a peek of the company's new smartwatch, while online pre-orders pushed delivery dates for some versions into July.

[SAN FRANCISCO] Few people lined up at Apple stores from Beijing to New York to get a peek of the company's new smartwatch, while online pre-orders pushed delivery dates for some versions into July.

The Apple Watch, a test of chief executive officer Tim Cook's ability to innovate, arrived Friday in stores in eight countries and Hong Kong for customers to preview. It officially goes on sale April 24, when delivery begins of devices that have been ordered.

Delivery times quickly pushed passed that date, after Apple began taking online pre-orders about 3 am in New York. By about 9 am shipments of high-end versions, which can cost as much as US$17,000, were delayed until June.

All 10 versions of the entry-level Sport, which starts at US$349, were delayed until June, according to the company's US website. Mid-tier models were being promised for delivery in four to six weeks, with four versions stretching into June or July.

"We view this as an indication of solid demand paired with very limited supply, with supply being the most significant limiting factor," Gene Munster, an analyst with Piper Jaffray, said Friday in a note to investors.

Optimism for Apple's new product lineup has helped push the company's shares to record highs this year. Sales of the watch may reach almost 14 million units in the fiscal year that ends in September, according to the average estimate of five analysts surveyed by Bloomberg.

The rollout of the first gadget under Cook is a test of a new way for the company to sell devices. To avoid the long lines of people camping out to get the latest iPhone, Apple initially is only takings orders for the watch online and suggested that customers make appointments to try on the device in stores.

By Friday morning at New York's Fifth Avenue store, customers could try on a watch without an appointment, waiting no more than 10 minutes for the opportunity.

"I was sort of surprised that there are not more people in the store," said Kishin Manglani, 24, a software engineer who builds iPhone apps. "I would say this is actually fewer than normal." He speculated that may be because of the price and because consumers can't leave the store with the watch.

The watch, which has a digital touch-screen, comes in two face sizes and three styles and is offered with different bands. It tells time, for starters, and offers capabilities such as tracking the wearer's health and fitness data, giving directions, sending messages and controlling music. Apps are available for shopping, checking into flights and monitoring sports scores. The device must be paired with an iPhone to work.

US-based Apple enthusiasts were active on Twitter early Friday morning as they were among the first to place their online orders. "Got it!!!" Gregg Mojica tweeted at 3:16 am.

Musician Katy Perry posted a photo on Instagram of the US$17,000, 18-karat gold watch with a bright red modern buckle and a Mickey Mouse motif on the face. Apple's website said that version wouldn't be available until June.

Apple has said it anticipates that smartwatch demand will outpace initial supplies. It may get 300,000 pre-orders in the first 24 hours and may sell 1 million watches during the opening weekend, including those early orders, according to Munster. He's estimating the company may sell 8 million units this fiscal year, generating US$4.4 billion in revenue.

The new product won't rival Apple's biggest seller, the iPhone, which helped fuel a record quarter of US$18 billion profit. Apple received 4 million pre-orders of the iPhone 6 and 6 Plus during its first 24 hours in September and sold more than 10 million during the first weekend, a record.

The iPhone 6 and 6 Plus were greeted with crowds at stores worldwide in September. In London's Covent Garden Friday morning, where the crowd passed 1,000 for the new iPhones last year, metal barriers sat unused, stacked beside the store. An hour before the doors opened, a handful of security guards were the only people outside.

At Galeries Lafayette in Paris, which opened half an hour earlier then usual for watch customers only, a line of 16 potential customers had formed by 9 a.m., outnumbered by 17 Apple employees and security guards. Customers were given times to come back in small groups to get their demonstration.

In China, the country Apple calls its most important overseas market, only 14 people lined up outside its store in Beijing on Friday to get their first peek at the company's new smartwatch.

"I must be here," said Lloyd Yu, a 29-year-old office worker carrying both an iPhone 6 and iPhone 6 Plus. "Everything Apple makes, I will buy at least one."

Still, the reaction in the Chinese capital contrasts with previous device premieres, where crowds hundreds deep lined up and some threw eggs at stores when iPhones weren't available. Cook has said China, which has 1.3 billion wireless subscribers, is poised to overtake the US as the company's biggest market.

The light turnout at stores Friday indicated less interest in the device than in previous Apple products, said Imran Choudhary, director of consumer insight at Kantar Worldpanel.

"It's a harder sell in terms of the use case, given the fact that Apple is pricing things rather steeply," he said.

BLOOMBERG