Everything Tim Cook said—and didn’t say—about Apple Watch sales

Apple $AAPL’s fiscal third-quarter earnings report yesterday (July 21) was its first since launching sales of the Apple Watch this past April.

The company, as promised, divulged very little about Apple Watch sales. It did not specify unit sales or revenue the way it does for other categories, such as the iPhone or iPad. (This is, supposedly, for competitive reasons.) But it did share some information in its release and on its earnings call.

• Apple Watch revenue was included in a category called “other products,” which generated $2.6 billion of revenue during the quarter.
• A year ago, that category—which also includes iPods, Beats headphones and speakers, Apple TV streaming media devices, and accessories—generated $1.7 billion in sales.
• Apple executives said that Watch sales accounted for “well over 100%” of the growth of the category, which has been shrinking from zero to 10% on a year-over-year basis over the prior four quarters.
• This implies that Apple Watch generated at least $900 million in sales—“well over” it, really. It’s probably somewhere between $1 billion and $1.5 billion. That’s not bad for the first quarter of any new product.
• What about unit sales? Assuming an average Apple Watch price between $500 and $600, that’s roughly 2-3 million sold during the quarter. Let’s say 2.5 million, which is the amount that Gene Munster, an analyst at Piper Jaffray, is also estimating. (That’s not 10 million, but it’s also not 1 million.)
• Apple did not share any sort of average price. Nor the sales mix between its various collections—which range from the $350 Sport to the $17,000 Edition. Nor sales by region.

Apple CEO Tim Cook also said on the call that “through the end of the quarter… Apple Watch sell-through was higher than the comparable launch period of the original iPhone or the original iPad.” This despite only 680 points of sale and a supply shortage.

It’s hard to do much with that information. Apple typically reports quarterly unit shipments into its sales channels—not sell-through, or sales to consumers. So we’d need different, more granular data to draw any conclusions.

Cook also said that Watch sales in June were higher than April or May. “I realize that’s very different than what is being written,” Cook said, likely referring to certain third-party sales estimates and articles painting the Watch as a flop. (It’s possible this is also the way Apple handles pre-orders that were made in April, but didn’t ship until June.)

The broader point Cook was making—that Apple is playing the long game, and is trying to set the Watch up to be one of its flagship categories for years to come—seems more fitting.

It’s undeniable that these sales figures are below some analysts’ estimates. And that the Watch isn’t going to be a major growth driver for Apple for some time—the company is simply too big for something to easily move the needle.

But just as it took the iPhone, iPod, and iPad years to hit their stride, it will be years, not months, before the Apple Watch—and wearable wrist computers in general—either turns out to be a bust or a major hit.