The Big Problem for the Apple Watch Is the Apple Store

New Apple Watches are seen on display in an Apple store in Sydney on April 10, 2015. Apple started taking orders from custome
New Apple Watches are seen on display in an Apple store in Sydney on April 10, 2015. Apple started taking orders from customers before the sale of the watch which will be available to buy in Australia on April 24, 2015. AFP PHOTO / Peter PARKS (Photo credit should read PETER PARKS/AFP/Getty Images)

Too few stores may constrain sales.

The Apple Store has served Apple well. In 2001 the new Apple Stores helped consumers understand and buy Mac computers at a time when buying personal computers had devolved into a confusing, time-consuming hassle. Since then Apple Stores have become the intellectual center and public face of the Apple product experience.

Product launches feature images of long, cheerful lines of patient customers waiting for the newest Apple device. Friendly, helpful Apple Geniuses demystify the latest technology. Sleek, subtle design elements help sell millions of smartphones, tablets, and computers.

Apple confronts inherent limits in selling new products, such as the Apple Watch, through this retail enterprise. With only 265 U.S. stores (and 453 worldwide), only so many units can pass through a given location each day. And a significant percentage of consumers -- even iPhone owners -- do not live near an Apple Store.

This footprint affects sales of other products that are widely available through other retailers. Among the three major product lines (iPhone, iPad, and Mac computers), other retailers outsell Apple's retail division (physical stores and website) by a wide margin:


Share of U.S. Apple product sales by retail outlet (2014)

In 2014 Apple Stores (and website) accounted for 12 percent of all U.S. iPhone sales, while the thousands of mobile phone carrier stores and their websites sold almost two thirds of U.S. iPhones.

Among other products, Apple retail sold 18 percent of all U.S. iPads, slightly behind Best Buy, with other retail outlets dividing the remainder of the U.S. market. The Apple Store and website leads only in Mac computers, with 43 percent of all U.S. sales.

At launch, Apple Watch will only be available for physical inspection at Apple Stores. In fact, some observers call this a calculated attempt to drive more customers into Apple Stores, where they can eye new iPhones, iPads, and Mac computers and perhaps buy an Apple TV. Investors will hear about inventory limitations and stock-outs of specific models.

It is not clear whether Apple Watch will sell like an iPhone accessory; like iPads, as an additional screen in one's personal Apple ecosystem; or like Macs, requiring a consultative sale. In any case, a major limiting factor will be Apple's retail footprint.

Look for Apple Watches at a Best Buy near you, sooner rather than later.

Consumer Intelligence Research Partners (CIRP) bases this analysis on its quarterly surveys of U.S. Apple customers and U.S. mobile phone customers since 2012. This analysis is based on 2,000 U.S. Apple customers who bought an iPhone, iPad, or Mac computer in 2014. For further information, please contact CIRP.