Saturday, April 20, 2024

Report: Apple Could Make $6 Billion on the iWatch

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Rumors of an upcoming Apple iWatch continue to swirl, with new reports saying the devices could hit the market this year. Analysts say that given the popularity of watches and the high margins in the industry, Apple could make $6 billion if it does introduce a watch.

Bloomberg’s Peter Burrows and Olga Kharif kicked off the latest round of rumors with a story that read, “While Tim Cook has dropped hints that Apple Inc. (AAPL) is hard at work on a television to drive the next era of growth, the company’s wristwatch-style device, still in development, may prove more profitable. The global watch industry will generate more than $60 billion in sales in 2013, said Citigroup Inc. analyst Oliver Chen. While that’s smaller than the pool of revenue that comes from TVs, gross margins on watches are about 60 percent, he said. That’s four times bigger than for televisions, according to Anand Srinivasan, a Bloomberg Industries analyst…. ‘This can be a $6 billion opportunity for Apple, with plenty of opportunity for upside if they create something totally new like they did with the iPod — something consumers didn’t even know they needed,’ said Chen, who covers luxury- goods retailers.”

The Verge’s Nilay Patel confirmed the story and added that the watch project “is being led by [Jony] Ive himself with some 100 engineers under him. Interestingly, we’re also told that Apple’s chosen to rework the full iOS to run on the watch instead of building up the iPod nano’s proprietary touch operating system — although the previous nano was already watch-sized and seemed like a great starting point for a wrist-sized device, Apple’s betting on iOS across product lines. That’s apparently leading to battery life issues in development, according to our sources: the goal is to last at least 4-5 days between charges, but the current watch prototypes are apparently only going for a couple days max.”

Ars Technica’s Jacqui Cheng noted, “Apple’s so-called ‘iWatch’ may launch as soon as this year…. The device will apparently compete with products like the Nike FuelBand and fitbit by housing its own pedometer (like the iPod nano) and other sensors for health data—these additions make sense, and indicate Apple’s trying to offer a more general lifestyle solution than just something that tells time.”

Forbes quoted analyst Marshal Cohen, who said, “Apple can merge fashion with function. An Apple watch could triple the size of the watch business in a year or two. They have the opportunity to get everyone that owns a cell phone to go out and buy another watch.”

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