Analysts Are Lowering Apple Watch Expectations Amid Flattening Demand

Apple analysts are lowering their expectations for the Apple Watch. Say that 10 times fast. The latest comes from KGI Securities' Ming-Chi Kuo, who dropped his estimates for watch shipments in the third quarter by 20 percent to 30 percent, to 5 million to 6 million units, according to a research note obtained by 9to5Mac.

That places KGI’s Apple shipment estimates for fiscal 2015 at about 15 million units, much lower than consensus estimates, which place shipments between 20 million and 30 million. The reason behind the revision: Apple Watch demand appears to be slowing down. When the Apple Watch was first made available for preorders, shipment times quickly slowed to June and July for many models.

A report from the Wall Street Journal had indicated that this was in part due to a faulty Taptic Engine produced by one of Apple’s supply-chain vendors. Unlike the traditional vibration of a smartphone, the Taptic Engine produces taps on an Apple Watch user’s wrist. Now, Kuo expects second-quarter production to be sufficient for Apple Watch demand, according to MacRumors. And production of the Taptic Engine is expected to pick up later this month. Of the watches sold, males may have dominated the customer base, Kuo said.

“We estimate that 42mm models account for over 80% of sales,” Kuo wrote, reports MacRumors. “Assuming that 42mm and 38mm watches are mainly purchased by men and women respectively, the Apple Watch has attracted mostly men.”

UBS Managing Director Steve Milunovich also issued his own note on the Apple Watch earlier this month, cutting his estimates for 2016 sales from 40 million to 31 million, Barrons reports.

“Given the advanced notice of the first media event in September along with the follow-up event in March, Apple built interest for which it has not been able to deliver,” Milunovich wrote. “This ambiguity surrounding the true availability of the Watch might be putting off consumers, reducing any sense of urgency and perhaps lowering initial demand.”

The Apple Watch has been available online only since its launch in April. But the company may begin selling them in-store starting in June, 9to5Mac says.