While everyone has heard the expression “you can’t win ’em all,” it’s sometimes hard to keep that top of mind when one is on a hot streak. Because even the biggest and most successful companies on the planet have to ride over a few rough patches on the always tumultuous road that we call innovation.
This week, Apple traveled that rocky road on two fronts. The less bumpy path spoke to early evidence that the Apple Watch may not quite be the hit early headlines made it out to be.
Apple Watch Selling Worse Than Thought – USA Today
Does Apple Watch Have A Problem? – The Street
The other set of headlines, which were about Apple’s new music streaming service, seemed to imply the road ahead was much rougher.
Apple Music Network Is Strong On Design, Weak On Social Networking – The New York Times
Apple Music Boldly Goes Where Others Have Gone Before – Also The NY Times
So what’s up? Little bumps on the road to greatness? PYMNTS has your quick guide to the red, right and blue reviews on both.
Apple Watch – Swing And A … Double?
Pacific Crest analyst Andy Hargreaves got the ball rolling earlier this week when we wrote a research note that indicated that Apple Watch sales had trailed off from initial levels. Hargreaves cut his FY15 sales estimates by half a million units, to a total of 10.5 million units. For FY16, he estimated a cut of 3 million units to land at a total 21 million watches to be sold in the next fiscal year.
“Store visits, Google search volume, third-party data and recent supply checks all suggest [the demand has fallen off],” the analyst wrote.
On the good news side, the sell-side analyst kept his Sector Perform rating on Apple’s stock, which he has had in place since September 2014. He also adjusted his estimates up on the iPhone, which is performing better than he had initially forecasted.
“Although we continue to expect iPhone sales to decline in the coming refresh cycle, ongoing share gains should prevent the decline from being as severe as we previously expected … We believe the majority of people earning $15,000 a year or more in the world will own an iPhone exiting [fiscal year] 2015.”
The analyst’s iPhone unit sales estimates for the current fiscal year and for the fiscal year that ends in September 2016 have been boosted by a respective 7 million and 10 million units, which would take total annual sales to 236 million and 218 million units.
Hargreaves raised his near-term earnings estimates on the company, forecasting earnings in the current year at $9.41, above the Street at $9.03, while his subsequent year’s bottom line estimate comes in at $9.29, below the consensus at $9.72.
The short version: Apple Watches don’t seem to be inspiring mass conversions to wearables – but are selling, and more people than expected are buying iPhones.
Apple Should Write A “Break-Up Ballad” About Taylor Swift
If 2015 has shown us anything, it is that there are many things consumers are ready to shake off. Angering Taylor Swift is not one of those things, as Apple learned the hard way when Ms. Swift posted her missive to her Tumblr account – the hit heard ’round the world.
Interestingly, the reviews weren’t exactly as negative as the headlines. Most sources praised the design elements of the app, noting that it was easy to navigate and basically intuitive to use. Though there have been some general titterings about it feeling a little overstuffed — and a bit like Apple attempting to do everything (and co-opt every model) all at once, most reviewers seemed to like the basic structure.
It just didn’t feel, well Apple-enough.
“But I was promised special, dammit,” one of Gizmodo’s always colorful reviewers wrote. “I wanted more from the company that revolutionized music with the iPod and iTunes. The former was the first really viable digital music player that people legitimately wanted to buy; the latter was a store for digital music that buoyed the tanking music industry for well over a decade.”
“Apple Music is nothing special.”
The main complaint seems to be that Apple’s streaming service is essentially similar to Spotify in every important facet – which means that Apple fans might use it, and people new to streaming might try it, but it will not attract anyone.
Two parts of the platform did get special attention: the Beats1 station — which is the Web’s answer to the AM dial and the DJed radio show — and the Connect feature, which is designed to be an interface for artists and fans.
Beats1 has been highly praised, but it is a non-exclusive part of Apple Music. It also streams as a station on Spotify.
Connect has been nearly universally panned as a place where record labels are dumping promotional material, though many have noted that the platform could have potential in the future — particularly for artists looking to market their music directly to the potentially large base of Apple fans.
Of course they may not get the chance. Reddit has already posted how to remove Connect from the Apple Music service – it remains to be seen how many people will hold on to it long enough to enjoy the features that some sources report are coming soon.
Rough Road Or Just A Bumpy Ride?
So the moral of the story this week for Apple seems to be that even a medium performance is akin to a failure for the biggest tech company in the world. While zero reviews indicated that Apple’s newest foray into music was a disaster, or that the Apple Watch has appalled the marketplace — the headlines may have led one to think otherwise.
Which is not to say that either service is a sure success either, since in both cases Apple has to prove something when it comes to both wearables and pay-to-stream, which is that consumers may not really be interested in either. So far there is no strong indication that they do — but then there is no strong indication they don’t, either.