Thinking Apple Watch for this Holiday? Better Order Soon

Thinking Apple Watch for this Holiday? Better Order Soon

Apple Watch Series 7 deliveries begin on Friday, October 15. The initial batch of Watches will be limited to consumers who pre-ordered a week ago. If you missed the pre-order window, get ready to wait. Our survey of Watch Series 7 lead times from Apple in the US, along with five other countries, shows average lead times ranging from 4-8 weeks. For perspective, in a typical year initial lead times range from 2-4 weeks. The lead times are of course a function of supply and demand. In the case of Watch 7, we believe the extended lead times are in part attributable to tight component supply, and more related to the rising tide of Apple Watch adoption.

Watch Series 7 subtle improvements are measurable

The headline improvement for Series 7 is a 20% bigger screen compared to Series 6 and a display that wraps around the edges. The increased display allows for larger buttons, along with a keyboard that slightly increases the utility of the Watch. Additionally, charging is reported to be 33% faster than the previous edition. Pricing remains the same as Series 6 at $399. Notably missing this year was any additions to the Watch’s biometric tracking capabilities. The foundation of Apple’s health offerings is data captured through the Watch, which today measures heart rate, AFib, blood oxygen levels, ECG, and fall detection. In the future, blood pressure and blood glucose monitoring are logical next features, showing Watch has room to grow as a data collection device.

Good news for Apple investors

Overall, we expect Watch will account for 5% of sales next year, growing at 15% a year. We believe 14% of the iPhone base has a Watch, and that this percentage will increase to 35% plus in the years to come as more biomarkers are added in the next couple of years, including blood pressure and working with third-party blood glucose monitoring applications. If the Watch continues to grow at 15% for each of the next five years, it will be a $38B annual business in 2026. Applying a 5x multiple to Watch revenue suggests the Watch business will be worth $190B. Big potential for a small product.