Apple Watch sales reach 2.8 million, with bands a profitable add-on, report says

Stepping into the void of Apple's silence on sales figures, a research firm finds clues to how well the Watch is doing.

Don Reisinger
Former CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
3 min read

No surprise here, but it turns out the Apple Watch is a profitable enterprise for the company. Scott Stein/CNET

Apple's flashy smartwatch is closing in on 3 million unit sales, new data suggests.

Apple has sold 2.79 million Apple Watch units since the device went on sale in April, research firm Slice Intelligence told Reuters on Thursday. The company added that of those buyers, 17 percent decided to buy at least one extra band to go along with the model they originally purchased.

Slice's data is based on an analysis of e-mail receipts for 2 million online shoppers in the US, according to Reuters. That group included approximately 20,000 people who bought an Apple Watch and whose receipts were analyzed by Slice.

The Apple Watch, which requires an iPhone 5 or later to run basic apps and receive notifications, is Apple's first foray into the wearables space. The pricey smartwatch tops out at $17,000 for the 18-karat gold edition, with more modestly priced options like Apple Watch Sport, starting at $349. Since its launch, Apple Watch had been available only for online ordering, but on Wednesday, Apple launched a "reserve and pickup" service, allowing customers in the US, UK, Australia and elsewhere to finally buy the device in-store.

The market for smartwatches and other wearables is a crowded one. Competitors to the Apple Watch include a range of new or updated devices from companies including Sony, Samsung, Huawei, Motorola, LG and Pebble.

Earlier this month, Apple unveiled a new version of the smartwatch's operating system, WatchOS, with improvements including apps that run natively on the device and more customization options. The operating system update is launching in the fall.

Apple Watch: A hands-on tour of Apple's first smartwatch (pictures)

See all photos

Conspicuously missing from that announcement, however, was talk of Apple Watch sales. Apple has steadfastly declined to say how many units it has sold, in contrast with the launch of other products, when the company has been quick to announce sales figures.

The silence has left the task of estimating sales to firms like Slice. In March, market researcher Strategy Analytics predicted that Apple would ship 15.4 million Apple Watch units this year, giving it 54.8 percent of the global smartwatch market. All other smartwatch makers combined were expected to combine to ship 12.7 million units in 2015.

Slice's receipt analysis showed that the Apple Watch Sport with a black sport band was the most popular option among consumers, followed by the white sport band version, Reuters said. Between them, the devices accounted for more than 65 percent of sales, according to Slice.

Among the 17 percent of buyers who bought an additional band for the Apple Watch, the black sport band was again the favorite, accounting for over 30 percent of sales, according to the data provided to Reuters. The Milanese loop band, which boasts a stainless steel mesh with an adjustable enclosure and costs $149, was second. Apple also allows third parties to build bands for its Apple Watch.

The additional purchases mean more profit for Apple. IHS, which tears down products to determine component costs, told Reuters that the 38mm black sport band costs Apple just $2.05 to make. The company sells the band for $49. Apple has similarly high margins on its other bands.

Those profits run in tandem with the financial windfall the company makes on the sale of the Apple Watch Sport. In April, IHS estimated that it costs Apple just $83.70 to produce the $349 device. So if customers are walking out of the store with an Apple Watch Sport and an accompanying band, Apple will make hundreds of dollars in profit on that sale.

Of course, massive profits are nothing new to Apple. The company similarly makes hundreds of millions of dollars on the sales of its iPhones and iPads, and in April, revealed that its gross margin -- the difference between its sales and costs associated with sales, including device production costs -- was 40.8 percent.

Apple did not immediately respond to a request for comment.