Apple Watch Will Do Well In China, India

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The Apple Watch becomes available for preorders in about a month, and analysts are busily speculating about how many watches Apple may sell in what time frame. Now a new survey suggests that China and India could actually be better markets than the U.S. for the Apple Watch.

So will Apple sell more smartwatches in Asia than it does in the U.S.?

Half of Chinese adults want a smartwatch

Researchers at element14 conducted study entitled “Engineering: A Connected World.” An early copy of the study was shared with ValueWalk. The survey covered 3,500 adults in North America, Asia, Europe and Australia.

The results indicate that up to 50% of adults in China are planning to buy a smartwatch sometime in the next five years. Demand is highest in India, with 53% of adults planning to buy a smartwatch. Unfortunately for Apple, it isn’t planning on including India in the initial launch.

In the U.S. and the U.K., however, demand for smartwatches is much lower, with only 16% of adults planning to purchase one. The same is true of Australia, where 18% of adults are planning to buy one, and France and Germany, where 19% and 26% of adults, respectively, want to buy a smartwatch in the next five years.

Apple Watch enjoys advantages

So what are Apple’s chances of taking a significant chunk of this existing consumer demand for smartwatches? In a report dated March 12, UBS analysts Steven Milunovich and Peter Christiansen said they spoke with wearable expert Sonny Vu, who founded Misfit Wearables. Vu highlighted a number of advantages the Apple Watch enjoys over other smartwatches.

First, he sees a big advantage in the fact that the Apple Watch is the only iOS-compatible watch other than Pebble’s smartwatch. Most of the others run on the Android mobile operating system. Second, he points out that Apple offers customization with a wide variety of different bands and three major classes of watch to cater to all price points from $349 and up. Other smartwatch makers don’t offer this level of customization.

Where Apple could hurt the competition

Vu divides smartwatches into three main categories, which are fitness-focused wearables, which include Fitbit; “screens on wrists,” which is where he places the Apple Watch, the Moto 360, and the Samsung Gear; and smartwatches from traditional watch makers like Swatch, Tag Heuer and Montblanc.

He sees the Apple Watch as presenting the greatest risk to competing products at the $250 and up price point. Included in this price point are the Samsung Gear, LG’s smartwatch and the Moto 360. He thinks watches at the $150 to $200 price point, which include Pebble, and the sub-$100 price point, which include the Jawbone and Misfit, will be the least effected.

One reason Vu thinks Apple will do well in the smartwatch segment is because it has placed importance on fashion, which he thinks is more important to consumers than technology when it comes to wearables. Vu also expects demand to be strong in Asia, and the survey mentioned above backs his view up.

How many Apple Watches will be sold?

The UBS team estimates that Apple will sell 16 million units of the Apple Watch this year and 20 million units next year. They point out that the first model looks more like an iPhone extension and say that the initial reviews suggest it is more “complex to use” than Apple’s previous devices.

They see a bright future for Apple’s wearable as the Internet of Things develops and the Apple Watch could become “the interface to sensors in hotel doors, thermostats, store beacons” and more.

The UBS team has a Buy rating and $150 per share price target on Apple.

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