Rakers' report, one of the reasons Apple is hitting new highs again on Tuesday, is largely based on expectations for the Apple Watch. A look at the numbers Rakers is projecting:
19.6 million units in calendar 2015;
A blended average selling price of about $490 in 2015;
27.8 million units in 2016 with $13.1 billion in incremental revenue;
An initial gross margin of 40 percent on the Apple Watch.
Add it up and Rakers raised his fiscal 2015 revenue estimates to $218.9 billion compared to Wall Street's estimate of $210.8 billion. He also raised Apple's fiscal 2016 estimates. Keep in mind that a lot of the upbeat prognostications come courtesy of the iPhone's expansion in China.
The notable concept in Rakers report is how the Apple Watch would reshape Apple's brand. Rakers said that 2015 shipments would equate to 6 percent of Apple's installed base. The iPad had about 35 percent of the installed base in the same launch time frame.
We believe Apple Watch will drive a deeper debate on Apple's vision going forward focused not only on use cases, but also positioning as an aesthetic fashion piece for a broad audience.
He also noted that Apple Watch's total market could be seen as a style/fashion category or as "the global number of addressable wrists."