Expert: Apple Watch Likely to Be Apple’s Most Profitable Product Ever (April 21, 2015)
The Apple Watch will be Apple’s most profitable product line ever, with gross margins exceeding 60 percent, according to some observers. But, some of the millions who pre-ordered their watches for delivery this week may have to wait a while for them to arrive. Apple says orders will begin shipping April 24, as originally planned, but it’s not guaranteeing delivery on that day. The first wave of buyers can expect to receive their Apple Watches between April 24 and May 8, according to a number of industry blogs. Delivery for others in the queue may stretch to June or beyond, according to reports.
Demand for the watch, which supports Apple Pay via a linked iPhone, has been intense. Slice Intelligence estimates U.S. Apple Watch pre-orders were 957,000 in the first 24 hours after going on sale April 10. Apple manufactured an initial run of more than 3 million watches to be delivered during May, which will likely yield revenues of more than $2 billion, according to Carl Howe, a tech blogger and researcher for the data site Think Big Analytics.
Apple Watches are available at prices starting at $349. The highest-grossing model will be the Apple Watch Edition, at $10,000 up to $17,000, Howe believes. According to his estimates, Apple has sold 40,000 of those units in eight models, which use the same core electronics as lower-end models but feature luxury frills, such as 18-karat gold watch cases in different colors. The manufacturing costs of the luxury versions are relatively small compared with the retail price, Howe notes. Delivery delays aside, Howe says the Apple Watch—available in nine countries—is “an overnight multibillion-dollar business.”
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