Did Tim Cook Protest Too Much Over This Dismal Apple Watch Report?

On Monday, IDC came out with a gloomy report on the sales prospects of the Apple Watch, estimating that sales had fallen 71% in the September-ending quarter and that the device accounted for just 5% of total wearables sales—an estimate that included fitness trackers like FitBit, too.

Many tech blogs ran with the story, prompting an uncharacteristically strong public response from none other than Tim Cook himself. In an interview with Reuters, the Apple CEO said Apple Watch “sell through” (actual sales, not just inventory shipped to stores) during the first week of the holiday season was the strongest the product has ever seen.

“Our data shows that Apple Watch is doing great and looks to be one of the most popular holiday gifts this year,” Cook said in the email response.

Cook is probably painting an accurate picture of the watch’s overall holiday sales. Neil Cybart, an analyst with Above Avalon, says Apple Watch could sell close to 5 million units this holiday quarter, making it the best quarter yet for the device. And longtime Apple analyst Tim Bajarin has a similar assessment.

“It does look like Apple Watch sales are strong for this quarter and they could sell between 4-5 million this holiday,” Bajarin says. “Tim Cook’s comments are accurate in that they are setting records, although it is hard to tell the actual numbers since Apple does not publish them.”

In truth, the IDC report was a bit misleading. As professional Apple-watcher John Gruber pointed out on the Daring Fireball blog, consumers already knew Apple was going to launch its new Apple Watch Series 2 at the end of September, so naturally many would-be buyers held off on purchasing.

“IDC often pulls numbers out of its collective ass…” Gruber quipped. (To be fair, IDC, like virtually all analyst firms that make them, has taken criticism for its future projections; but the firm’s estimates of unit shipments and market shares in the past are generally trusted.)

IDC, for its part, acknowledges that fact contributed to its low Q3 sales estimate, but it insists that other, more disturbing factors were more important. “[T]he primary reasons for the downturn were an aging lineup and an unintuitive user interface,” IDC said in a statement. “Though both issues have been addressed with the latest generation watches, Apple’s success will likely be muted as the smartwatch category continues to be challenged.”

What’s Really Going On?

Many would-be Watch buyers likely held off in the September quarter not in anticipation of a new Watch, but because they hoped to see lower prices on the original Apple Watch. And those prices were worth waiting for.

Target and Macy’s are each selling the aluminum Sport edition of Apple Watch Series 1 for $199, down from $249 as Cybart points out. Target is even giving away a $50 Target store credit with every Watch Series 1 purchase.

“While there were big sales on Apple Watch Series 1, there weren’t any sales on Apple Watch Series 2,” Cybart says. “This led to a pretty big price gap between the $199 and the $369 starting price for Series 1 and Series 2, respectively.”

“Apple Watch Nike+ also sells for $369,” Cybart adds. “In that scenario, my suspicion is that Series 1 outsold Series 2 by a healthy margin.”

The new Apple Watch Series 2 looks almost identical to the Series 1, with the only major new feature being a GPS radio inside for tracking runs.

Especially now that Apple has repositioned the Watch mainly as a fitness device, it’s likely the device will start showing a solid upward arc in sales numbers. Smartwatches, after all, are still a very new category to most consumers, and it’s taken some time for the Watch to bridge the gap between early adopters and mainstream adopters. The fitness angle might help a lot—we’ll have to wait until after the holidays to know for sure.

Cook’s direct response to a media request for comment on a negative industry analyst projection seems a little panicky. If the point was to reassure investors, employees, and others that Apple knows what it’s doing in the smartwatch market, it may have instilled more doubt than confidence.

Apple Watch is just one of many Apple products, but it’s an extremely important one. It’s the first wholly new product released by Apple under the leadership of Tim Cook. Its development arc, positioning, and public acceptance will eventually tell us a lot about Apple’s ability to delight tech consumers in the post-Jobs era.