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Deutsche Bank Analyst Explains Why Apple Watch 'Has Limited Ability To Move The Needle'

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Deutsche Bank technology analyst Sherri Scribner released a report Thursday in which she argues that the Apple Inc. (NASDAQ: AAPL) Apple Watch “has limited ability to move the needle,” for the company.

Scribner was on CNBC Thursday to explain her stance on the watch.

Great For Most, Not For Apple

“It's not that I don't think it can't stack up to other products. I think it's a really interesting product,” Scribner said. “It's just that Apple has so much revenue at this point that it'll be hard for a new product to really move the needle.“

Related Link: Is The Watch Set To Be Apple's "Bad Apple"?

She explained, “iPhone is about 60 percent of revenue; it's more of profitability. And the watch is going to be a slow ramping product. My estimate is that by 2018, it's about 25 percent of iPhone sales, $26 billion in revenues – which is great for most companies, but for Apple, it's still less than 10 percent.”

Install Base Matters

When asked about why she feels consumers will ramp up the watch quickly, Scribner replied, “When the iPhone came out, it was so new and so revolutionary that the ramp of the product, the adoption of the product, took some time. What you have seen with Apple's past products after the iPhone, the iPad ramped pretty quickly, and I think you'll see a similar ramp with the watch that you saw with the iPad because now we have that installed base.”

Investor Expectations

“So, I don't think investor expectations are that high for the watch at this point,” she said.

“Twenty million would be great; even better than that would be probably considered pretty good too,” Scribner concluded.

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