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Apple Plays Coy Over Apple Watch Performance

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Photo courtesy Apple

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Apple CEO Tim Cook said in April that he was "thrilled" with consumer demand for the Apple Watch. Three months later, we still don't know precisely how well it's selling.

Apple today reported its financial results for the three months ended June 27, the first quarter in which its highly anticipated smartwatch was available. (The Apple Watch was first released on April 24.) Unlike with the iPhone, iPad, and the Mac, Apple does not break out sales figures for the Apple Watch, choosing instead to lump the smartwatch into a catchall reporting category called "Other" that also includes the iPod, Apple TV, and accessories like Beats headphones. Cook, who keeps these numbers confidential so as not to tip his hand to competitors, said only that Apple Watch sales outpaced iPad sales in both products' first nine weeks of availability.

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While "Other" generated $2.6 billion in revenue in the quarter, analysts are left to fill in the blanks to estimate how well the smartwatch is performing.

"Our data suggests that Apple Watch is a really niche product," said Michael Levin, whose research firm, Consumer Intelligence Research Partners, estimates there's at most 5 million prospective Apple Watch buyers in the US in the short term. "Fewer than 5 percent of US iPhone owners have any kind of fitness tracker or sport watch, much less one that costs almost $400 for the most basic model."

Other estimates vary. One research firm, Canalys, suggested earlier today that Apple shipped 4.2 million units worldwide through the end of June. Another research firm, Piper Jaffray, puts that number at 3 million units, and claims that the Apple Watch won't really take off until 2017 after more compelling apps are developed and more compelling use cases for the device are made apparent to consumers. While these numbers would make Apple the world's largest smartwatch maker, they're significantly smaller than some of the more bullish estimates that analysts proffered in the months before the Apple Watch was officially announced in September 2014.

"When TV first launched in the US, it took many years to reach 1 million units," countered Horace Dediu, of the Asymco research firm. "Sales of 4 to 5 million units sold would be the single biggest launch of a new product category in the history of the world," beating Apple's own iPhone and iPad when they were first introduced in 2007 and 2010, respectively. Dediu, who insists the Apple Watch should be considered a new "thing" and not merely a new product, also pointed to a recent survey showing 97 percent customer satisfaction with the Apple Watch, the highest ever for a first-generation Apple product.

As for the iPhone, Apple's unequivocal cash cow, the company shipped 47.5 million units in the quarter, up from 35 million last year—numbers any other smartphone maker would die for. The summer months are typically the slowest for iPhone sales as customers hold off on upgrading in anticipation of new models, which Apple typically announces in September.