Why Apple Must Sell 1 Apple Watch For Every 20 iPhones

Apple Inc. AAPL is expected to sell a sizeable number of iPhones within the first 12 months at retail.

• Tech expert Sean Udall believes the company will sell 15 million units.
• LikeFolio's estimates came in a tad lower at 9 to 14 million units.
• Piper Jaffray analyst Gene Munster expects sales to come in at 8 million units.
• On the high end, Global Equities Research analyst Trip Chowdhry thinks Apple could move 40 to 42 million units.
• Morgan Stanley's Katy Huberty recently raised her prediction to 36 million units.

"Put it in the context of how many iPhones they'll sell," former hedge fund manager Cody Willard told Benzinga. Apple sold more than 190 million units in 2014:

• December Quarter: 74.5 million
• September Quarter: 39.2 million
• June Quarter: 35.2 million
• March Quarter: 43.7 million

"They have to sell one Apple Watch for every 20 iPhones to hit a 10 million unit number," said Willard, estimating that Apple will sell roughly 200 million iPhones in 2015. "I think that's an awfully high order. I don't think one out of every 20 people buying an iPhone are buying an Apple Watch."

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Big Sales Not Needed

Rich Tullo, director of research at Albert Fried & Company, said the low margins ensure Apple Watch will be a success even if sales disappoint.

"It's a watch that costs them $100 to make and sells for several hundred," Tullo told Benzinga. "You don't need to sell many of them to be successful." Tullo doesn't expect investors to know how the Apple Watch truly performed for quite some time.

"Three years from now we'll know," he said. "On the first iteration, it looks like they did a good job at the launch. It looks like people like it. But it's in the first adoption phase. I don't think there were too many iPhone apps in the first year. Look where we are now -- it's the No. 2 phone in the world."

Not Hiding A Thing

Willard doesn't think Apple's silence on Apple Watch sales means that it has something to hide.

"I don't think Apple's hiding something," said Willard, who serves as the chairman of Scutify and Futr. "They put it in store because it wasn't selling as well [online] as it hoped. Now that it's in store, I don't think it's selling as well still."

That said, Willard is not concerned about the next 30, 60 or 90 days of sales.

"It's about the next 18 months to two years," he said. "It's not [about] this month or next summer. I would be cautious about…this quarter's results on the Apple Watch."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.