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Wearable Tech

Apple Watch sold faster than original iPhone, iPad, says Cook

Apple CEO Tim Cook also says Watch sales were at their highest rate during the June part of the quarter, dismissing the notion that interest has tailed off.

The Apple Watch has been quicker off the blocks than the original iPhone and iPad, says Apple. Josh Miller/CNET

The Apple Watch is off to a better start than the original iPhone and iPad.

That's according to Apple CEO Tim Cook, who said sales of the wearable to consumers exceeded the unit sales of the first iPhone and iPad in their comparable launch periods. He added that the Apple Watch saw its highest sales in June -- dismissing the notion that demand has trailed off. But Cook still didn't provide any actual numbers, and the Apple Watch launched in nine countries while the iPhone and iPad were US-only in the beginning.

The comments come amid increasing questions about how well the Apple Watch has done -- further stoked by the company's decision not to break out specific sales numbers for the smartwatch. While the Apple Watch has been the highest-profile product in the category, which includes other watches from the likes of Samsung Electronics and Motorola, it's unclear whether mainstream consumers are ready to hop on the bandwagon.

In June research firm Slice Intelligence calculated, based on an analysis of e-mail receipts, that Apple had sold 2.79 million Apple Watches since April, but Slice said in early July that daily sales had dropped 90 percent from the first week of sales to the beginning of July. Fellow research firm Strategy Analytics predicted in March that Apple would ship 15.4 million watch units in 2015, giving the company 54.8 percent of the global smartwatch market. KGI Securities analyst Ming-Chi Kuo echoed the 15 million figure in a May investors note, but a fellow Apple analyst, Morgan Stanley's Katy Huberty, believes Apple will sell 30 million watches during the first 12 months after launch.

Despite the confusion about how Apple Watch has sold, Cook remains bullish.

"Sales of the Watch did exceed my expectations, despite supply trailing demand at the end of the quarter," Cook said on a conference call with analysts after reporting fiscal third-quarter results that showed a gain in profits, but weaker iPhone sales than expected.

Cook added that he plans to expand the channel of Watch units for the holiday season, banking on the fact that Apple's smartwatch will be a top gift for the period.

The closest indication of the Watch's success is through the "Other Products" category on the company's financial report. The segment saw revenue rise 49 percent over a year ago to $2.64 billion. Apple said it wouldn't disclose Watch unit sales because it didn't want to offer competitors "insights" from the figures.

But more telling is the difference between the third quarter and the second -- the last period before the Apple Watch was on sale. Other product revenue was up $952 million sequentially, and Apple Watch accounted for "well over" 100 percent of the growth of the category, Luca Maestri, Apple's chief financial officer, said during a call with analysts.

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But Maestri and Cook warned against assuming that the performance of the Watch matches the performance of the category, which also includes Apple TV, iPods, Beats headphones and accessories. Many of those areas, including the iPod and accessories, saw shrinking revenue.

Analysts tried to decipher what the comments from Cook and Maestri indicated for Apple Watch sales.

PiperJaffray analyst Gene Munster on Tuesday initially believed Apple sold about 1.2 million Apple Watches, assuming the average selling price was $550. Munster later revised his forecast after Apple's earnings call to 2.5 million, which he called "in line with investor expectations." He said he made the change following Cook's comments. Still, even that level is below what Munster thought before the report -- 3 million -- and below what most analysts expected -- about 4 million, he said.

"We believe the number may fuel investor concerns about the near and long-term wearable opportunity," he said in his first note after the earnings report was released. "It's too early to write the Watch off," Munster added, but he noted that analysts' estimates for sales of the device would likely be lowered on Wednesday.

There were additional reasons Apple was feeling strong about the continued success of Watch. Cook boasted that the product can already use 8,500 apps, and the introduction of the second version of its Watch OS software later this year will bring the capability to run apps that can take advantage of the Watch's heart rate monitor and other core functions.

"Beyond the very good news on sales, we're more excited on how the product is positioned for the long term, because we're starting a new category," Cook said.

Update, 3:45 p.m. PT: Adds comments and details.

Update, 5:50 p.m. PT: Updates PiperJaffray's watch estimate.