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Apple Watch: Putting A Dent In The Swiss Watch Industry

Apple (NASDAQ:AAPL) is expected to sell about 4 million Apple Watches for the September quarter. If it does, this will represent a huge victory for the company. Apple will have established that it really can successfully enter new hardware categories. Within the span of a single quarter, Apple has established not merely a new product, but almost a new industry, with unit sales more than half of total Swiss watch production for the quarter. In the process, Swiss watch exports declined by 7%, and even more in the price range of a typical Apple Watch. Apple is no longer merely a competitor for single companies, but for entire industries.

Swiss Declines

The estimate of 4 million Apple Watches sold in Apple's fiscal 2015 Q4 comes via Philip Elmer-DeWitt and represents a rough median of his poll of analysts. This is almost double what I estimate Apple sold in the June quarter, 2.1 million units. At an assumed $450 ASP, this will add another $850 million to Apple's top line compared to last quarter.

In the same quarter, Swiss watch exports declined y/y about 8% to 7.1 million units, according to data supplied by the Federation of the Swiss Watch Industry. Although the unit decline was not large (about 600,000), most of the decline was in the critical price category of 200-500 Swiss Francs ($210-524), right where the Apple Watch ASP sits. This can be seen in a chart for the month of September provided by the Federation.

Geographically, the declines in Swiss watch exports have been most pronounced where Apple is very strong. In September, exports to the U.S. were down 17.6% y/y, exports to China were down 13%, and exports to Hong Kong were down 18.2%.

Value Proposition

The advantage of Apple Watch has been...


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