The WSJ’s ‘People Familiar With the Matter’

Lorraine Luk and Daisuke Wakabayashi, reporting for the WSJ on February 17:

Apple Inc. has asked its suppliers in Asia to make a combined five million to six million units of its three Apple Watch models during the first quarter ahead of the product’s release in April, according to people familiar with the matter.

Half of the first-quarter production order is earmarked for the entry-level Apple Watch Sport model, while the mid-tier Apple Watch is expected to account for one-third of output, one of these people said.

Orders for Apple Watch Edition — the high-end model featuring 18-karat gold casing — are relatively small in the first quarter but Apple plans to start producing more than one million units per month in the second quarter, the person said.

This reads like utter nonsense in light of Apple Watch Edition’s now-announced pricing. A person “familiar with the matter” told them Apple expects 16 percent of Apple Watch sales to be Edition models? One out of every six is going to cost $10,000 or more, and will only be available at (quoting Tim Cook on stage this week) “select retail stores”?

Cook said at the end of Monday’s event, “There will be limited quantities of the Apple Watch Edition.” But someone “familiar with the matter” told the Journal three weeks prior to the event that Apple planned on producing one million Edition watches per month next quarter?

(Update: To put this in context, 1 million Edition watches sold per month would generate around $12 billion in monthly revenue, and about $36 billion in revenue per quarter. Their record-breaking most recent quarter included $75 billion in revenue total. The numbers from the WSJ’s “people familiar with the matter” would thus make Apple Watch Edition — just Edition — half the size of the entire company by revenue in its most recently completed quarter.)

I’d say Luk and Wakabayashi’s sources were more familiar with the view inside of their derrières than they were with Apple’s plans for Apple Watch.

Thursday, 12 March 2015