Mega-billionaire Carl Icahn published an open letter to Apple CEO Tim Cook this week, and the Apple head honcho is likely breathing a huge sigh of relief after reading it. After all, Mr. Icahn is not just some schmo concerned about what a wearable device looks like on his wrist. He is one of Apple’s largest shareholders at about 53 million shares, and his views about the company have a huge impact on the campus at Cupertino.
Earlier this year, Icahn blasted Cook for failing to return Apple’s $160 billion in cash savings to investors, so the guy is certainly not afraid to throw his weight around at head office.
Apple quickly responded by issuing a cash dividend. Icahn’s position can change the course of Apple’s direction. So the hundred-billion dollar question was, what did Icahn think about the Apple Watch?
Turns out he likes it a lot, although his comments about the Apple Watch retail price seem to contradict some of the other reports we’ve been hearing.
Icahn said he expects the Apple Watch to have a “significant impact” on Apple’s growth. He praised Apple head of design Jony Ive and his team for bringing to market “a product that revolutionizes the entire category from both a hardware and software perspective, especially given that Apple has developed an entirely new operating system for this device, and catered to the notion that such a device needs to be far more fashionable and personal than other products currently available in this category.”
He went on to say that he forecasts a “reasonable” attach rate of the Apple watch to the iPhone, “with unit sales volume resembling that of the iPad in scale, and ramping at a similar incline, selling 20 million units in FY 2015, 45 million units in FY 2016, 72.5 million units in 2017.”
Wow. Predicting 72 million Apple Watch sales in 2017 seems like a pretty optimistic outlook when you consider that overall smartwatch sales barely hit 2 million last year, and that the device is nowhere near acquiring the must-have status of the smartphone. Well, he’s a pretty smart man. Maybe he knows something we don’t.
Some eyebrows were raised, however, when Icahn stated that he expected “an average selling price of $450 per unit” of the Apple Watch. Given that the Apple Watch Edition series, with its gold casing, has been estimated to retail anywhere between $1,000 and $5,000, many are wondering where the average price of $450 is coming from. Perhaps the idea is that Icahn expects many millions more of the $350 Apple Watch Sport version to be sold, and that the Edition sales will be much, much lower.
Which is not an unreasonable assumption when you’re a smart guy like Carl Icahn.