Apple watch

Apple commands smartwatch profits and Apple Watch Ultra will increase that lead

AppleInsider may earn an affiliate commission on purchases made through links on our site.

Investment bank JP Morgan says that in addition to already dominating Apple Watch revenue, the Apple Watch Ultra could represent $10 billion in additional revenue from extreme sports users.

Tracking the availability of JP Morgan products has recently reported strong demand for iPhone 14 Proand its analysts have now concluded that the Apple Watch Ultra is also a significant hit.

“Apple Watch Ultra delivery times are between 25 and 45 days from initial availability, compared to 9 to 30 days for the Series 8 and 5 to 10 days for the SE variants,” JP Morgan analysts say in a note seen by AppleInsider. “In our view, we believe that the extended delivery times for the Apple Watch Ultra suggest early success in welcoming customers with the new model, which has held up for at least the first six weeks since. the initial launch.”

The company describes the Apple Watch Ultra as Apple’s first, and so far only, entry into what it describes as the premium smartwatch market.

“We estimate the premium smartwatch opportunity for Apple to be between $10 billion and $38 billion,” the report continues, “with the low-end encompassing the upgrade for sports-focused consumers, while the high end of the range encompasses all consumers have focused on basic features, like better battery life.”

Even before the addition of the Apple Watch Ultra, JP Morgan notes that Apple was already the leader in the entire smartwatch market in terms of unit sales and especially revenue.

He says Apple Watch has 48% of the market, but also a 62% share of revenue. The Apple Watch Ultra isn’t the only high-end watch, however.

“[Direct] direct competitors, like Garmin, also have a high-end positioning in the market,” says JP Morgan, “with their portfolio including sports-focused watches priced between $700 and $1,000 and high-end watches. range priced between $1,500 and $2,500.

By comparison, the Apple Watch Ultra retails for $799. “[We] see a roadmap for Apple to launch more high-end watches to expand the portfolio,” the JP Morgan report said.

The smartwatch market is maturing and Apple’s share is shrinking

The investment report notes that although Apple is the dominant market leader, it has lost about 175 basis points each year.

Across all types of businesses, 1 basis point represents 0.01% of a value, in this case Apple’s unit shipments. For example, JP Morgan claims that “despite double-digit growth in most years,” Apple’s overall market share has declined by approximately 1.75% per year.

With sales on the rise, this drop in share is due to the rise of alternatives. JP Morgan says Samsung and Garmin have gained about “50 basis points or less per year.”

Currently, JP Morgan estimates that Apple has 48% of the market while Samsung has 15%, Garmin 8% and Google 6%. The company says Google’s increase to 6% from its previous 2% is due to its Acquisition of Fossil.

How the Apple Watch Ultra and Apple Watch Series 8 models appeal to current Apple Watch users looking to upgrade

How the Apple Watch Ultra and Apple Watch Series 8 models appeal to current Apple Watch users looking to upgrade

The future of Apple Watch Ultra

JP Morgan reports that based on its own survey of existing Apple Watch users wanting to upgrade, about half intended to buy the Apple Watch Ultra.

“As a result, we are seeing a more targeted consumer base relative to sports users, both installed users and Switchers finally ready to adopt the Apple Watch as performance gear,” the report continues. “However, the biggest demographic opportunity lies in upgrading the existing Apple Watch install base, with better battery life as a primary driver.”

JP Morgan bases its $10 billion revenue claim for the Apple Watch Ultra on an estimate of “the portion of Apple’s installed base that is looking for a watch suitable for extreme sports.”

“However, interest in Ultra extends beyond extreme sports to Battery Life and generates a larger $38 billion opportunity,” he continues.

JP Morgan has set a price target for Apple shares at $200 in April 2022. This latest report maintains the same objective.