Apple (NASDAQ:AAPL), the maker of the iconic iPhone, has reportedly ordered its Asian watch vendors to manufacture five million to six million units of three Apple Watch models in the first quarter as it gears up to launch the gadget in April.
Taiwanese company Quanta Computer is the assembler of the Apple Watch. The low-end Apple Watch Sport model constitutes fifty percent of the entire order, mid-level model accounts for one-third while the top-tier model which features the 18-karat gold frame constitutes the rest. However, Apple could ramp-up the production of the high-end model to over 1 million units a month in the second quarter. This could allow the company to tap into the booming sales in China.
The Apple Watch Sport model, with Ion-X glass display, will be available from $349. The company hasn’t unveiled the price of its mid-tier Apple Watch that comes with the scratch-resilient sapphire crystal cover. The price of the high-end Apple Watch model could be north of $4,000, making it the most expensive product for Apple.
According to estimates by Canalys, nearly 720,000 watches were supplied by all Android wear makers in the second half of the last year. In these terms, an initial order of five million is a significantly greater number. However, the manufacturing orders for Apple Watch are identical to the debut of the iPad where the company sold 7.5 million pieces in the first six months. The five million unit production plan is established on forecasted sales which will most likely wipe out the existing demand for wearable devices offered by other companies like Samsung, LG Electronics and Motorola.
Apple is nimble with supply chain and ordering and can adjust the production plans if sales vary from forecast.
The Apple Watch is the first new product offering from the company since the launch of the iPad in 2010. The smart-watch will be an amalgamation of several wearable devices. It will have a music player -- like an iPod -- and a heart-rate monitor with a fitness tracker. It can be used to send and receives messages, make audio calls and recordings, control Apple TV and smart connected devices and make payments through Apple Pay.
The shares of Apple have climbed more than 30% over the last six months, settling at $127.83 when the markets closed on Tuesday. The rally, which led to the company’s valuation of more than $700 billion, is due in part to the anticipated launch of the Apple Watch.
This article is written by Adnan Mushtaq, research assistant at Half Bridge Business Review and is a part of Half Bridge Business Review’s news coverage.