It’s hard to predict the future demand for new kinds of technology. We can’t know when a product will be transformative like the PC or cell phone and give birth to entirely new hse cases.
The same problem applied to mobile phones. You could do a bottom-up analysis that counted business travelers, taxi-drivers, fleet dispatch and so on, and get to maybe 10-15% of the population. Lots of people did that in the 1990s. They were all wrong. For phones, as for PCs, you had to make an imaginative leap into the unknown. You had to say ‘I believe’ that this experience will be transformative, and everyone on earth who has the money will get one. Moore’s Law takes care of ‘having the money’ meaning 4-5bn people, but it’s the imagination that gets you to teenage girls living in text messages. You could predict that phones might get really cheap, but not what that might mean.
And that’s precisely both the challenge and potential Benedict Evans sees for Apple Watch.
This is the problem with forecasting sales of the Apple Watch. Annual watch sales are a bit over a billion units, and people buy watches at anything from $5 (China exported over 600m watches last year at an average wholesale price of $3) to $500, $5000 and $50,000. But this doesn’t tell us anything useful. The fact that you buy a $10 watch, or a $1,000 or $10,000 watch, or buy no watch at all, tells me nothing about whether an entirely new product that you also wear on your wrist would be appealing. The fact that you bought a watch x years ago and the average replacement rate for watches is y tells me nothing about whether you’d replace it with an Apple watch, tomorrow, if you saw one.
That is, there are, in principle, hundreds of millions of people available to be persuaded to buy a smart watch, but we cannot draw any firm conclusions about how may will do so from looking at the existing watch market. That’s like looking at the typewriter market to forecast PCs.… We have no data for how many people will find a place for this in their lives, just as, 20 years ago, we had no data to support the idea that almost everyone would find a place for a mobile phone.