Apple Watch: ASP at $510 or higher? [Updated]

There has been a lot of interest in Apple Watch since it was announced last week. The two big questions for investors are

  1. How many will Apple sell? and
  2. What will the average selling price be?

An article at Seeking Alpha by Stone Fox Capital make the argument that it will likely not move earnings significantly.

They note that, with revenue close to $200 billion next year, the Watch would need to sell $22 B in order to account for 10% of the total.

Additionally, they note that Citigroup estimated Apple will sell 14 million units next year. They then go on to calculate out at a price of $349.

If my calculations are accurate, Apple must sell roughly 55 million watches at the average low-end price of $349.

While the writer’s point is made, the price is obviously absurd. This is the base price and we all know that it will only go up from there.

So, I have made some projections of price points and percentage of sales in each range. I created what I see as reasonable ranges for low, middle, high and ultra-high ranges, and I believe the distribution curves are both rather reasonable. In each price range I have expected that the average price is closer to the bottom than the top.

First I do a conservative estimate using the 14 million units estimate.

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