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Recent Survey Shows Most Won't Be Early Adopters of the Upcoming Apple Watch (AAPL)

December 22, 2014 10:28 AM EST
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Piper Jaffray analyst Gene Munster weighed on Apple (NASDAQ: AAPL) after conducting his latest Apple Watch survey. Based on the survey, he believes consumers are taking a wait-and-see approach to the new device.

"In our most recent survey of 968 US iPhone owners, 7% of iPhone owners stated they intend purchase an Apple Watch, which compares to 8% in September after the announcement of the Watch, and 10% in September 2013," Munster said.

The analyst further noted that on iPhone 6/6Plus launch day, in their survey of 386 customers waiting to buy the new iPhone, 34% of customers stated that they expect to buy an Apple Watch. Munster believes that these are likely early adopters that over-index to the total population.

Munster believes the muted response to the Watch is due to consumer questions including what is the killer feature of the watch, and what applications will be available for the watch.

"We believe that as we get closer to launch next year, Apple will answer many of these questions and demand will increase; however, we still believe expectations for the first year of the watch should remain conservative."

Despite the survey, Munster remains comfortable with his estimate of 10 million Apple Watch units for the first full year of sales with a $500 ASP. He believes the Watch goes on sale in the Jun-15 quarter, thus the actual CY15 sales of the Watch may be around 8 million. Meanwhile, Munster believes Street models currently assume around 12-15 million Watches in CY15.

"As we get closer to launch of the Watch, which we expect in the Jun-15 quarter, we believe that Apple will begin to highlight more functionality of the product as well as third party apps, which we note were what eventually helped the iPhone accelerate in adoption. We continue to believe the Watch can be an important product for Apple, but expect first year sales to be modest."

The firm maintained an Overweight rating and price target of $135.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $111.78 yesterday.



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Piper Jaffray, Gene Munster