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Strong early demand for Apple Watch

By Reuters
San Francisco/Paris, 13 Apr 2015

Customers who pre-ordered Apple's smartwatch on Friday will have to wait at least a month for delivery, a sign of strong early demand for CEO Tim Cook's first major new product.

People flocked to Apple's stores around the world last week to get a close-up look at the Apple Watch, the tech company's foray into the personal luxury goods market, with Apple predicting demand would exceed supply at product launch.

Cook, interviewed on television channel CNBC, said initial orders were "great" for the device, available for pre-order online and to try out in stores by appointment, but not to take home.

"We view this as an indication of solid demand paired with very limited supply," Piper Jaffray analyst Gene Munster wrote in a note to clients. "We continue to expect modest sales in the June quarter as demand increases over time."

Continued demand will be a key factor in the smartwatch's success once the initial wave of interest from Apple enthusiasts subsides.

The watch goes on sale officially on 24 April, online and through appointments in shops, including trendy fashion boutiques in Paris, London and Tokyo ? part of Apple's strategy of positioning the wearable as a must-have accessory.

But soon after online pre-orders opened on Friday, Apple's Web site listed shipping times in June for some models of the watch, and four to six weeks for others.

There was immediately brisk bidding on eBay for confirmed orders for watches, with hundreds of sellers looking to make hundreds or thousands of dollars by passing on their watches once received.

Testing Apple's mastery of consumer trends, the watch is an untried concept for the Cupertino, California-based company. It straddles a technology market accustomed to rapid obsolescence and a market for luxury goods whose appeal lies in their enduring value.

The Apple Watch Sport starts at $349, while the standard version comes in at $549 in the United States. High-end "Edition" watches with 18-karat gold alloys are priced from $10 000 to $17 000.

At a San Francisco Apple store, dozens of customers crowded around newly-installed wooden cabinets, snapping pictures of the gadgets on display under glass. Apple employees, admittedly unfamiliar with the watches' finer points, guided customers through features like text messaging, maps and fitness tracking.

Mixed reviews

At Apple's flagship store in New York, Jack Weber, visiting from Charlottesville, Virginia, said he would give his wife a top-of-the-line "Edition" as a 50th anniversary gift. "What more perfect wedding present could there be than this watch?" he said.

Long wait times are likely to stimulate demand for the watch ? which allows users to check e-mail, listen to music and make phone calls when paired with an iPhone ? with little risk of losing impatient customers, said JMP analyst Alex Gauna.

"You would want to catch up by the holiday season," Gauna said. "But based on what's out there in Android land, I don't think there's an extreme risk in the short term of losing customers who must have a smartwatch and will go to some alternative."

Android is Google's mobile operating system used on many smartwatches.

Reviewers this week praised the watch as "beautiful" and "stylish" but gave it poor marks for relatively low battery life and slow-loading apps.

Sales estimates for 2015 vary widely. Piper Jaffray predicts eight million units and Global Securities Research forecasts 40 million. By comparison, Apple sold nearly 200 million iPhones last year.

Apple's watch is widely expected to outsell those by Samsung, Sony and Fitbit. It will likely account for 55% of global smartwatch shipments this year, according to Societe Generale.

"Apple will outsell its wearable rivals by a very wide margin, but it will do this on the power of its brand and its design alone," said independent technology analyst Richard Windsor.

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