Apple’s rumored iWatch: A big deal or not?

“The beauty of Apple, from an investor’s point of view, is that they have, over the last fourteen years created new gadgets that have each become almost a necessity in our lives,” J. M. Manness writes for Seeking Alpha.

“For over a year now we have been hearing rumors of a forthcoming iWatch,” Manness writes. “We hear rumors of sapphire displays, curved displays, biometrics, health sensors and more. While evidence mounts for some of these rumors, we are all unsure as to what it will bring, if it comes at all.”

Manness writes, “I think the iWatch will be a gadget whose added value is mostly a novelty. Of course some may want it as such, but for the average person, it will never be that desired… iWatch really has a short term potential of adding a mere 3% to Apple’s revenues and profits.”

Read more in the full article here.

MacDailyNews Take: Limb, meet J. M. J. M., meet limb. iCal’ed.

11 Comments

  1. It has a lot of potential, but there are so many variables for this product. We do not know what features it will have, how useful it will be and for any type of outer wear, what it will look like. And then still, when it comes to fashion, one size does not fit all. Fashion is a flighty bitch.

  2. I have to agree that an iWatch really won’t directly add much to Apple’s bottom line, even if it’s a wild success.

    Since the iWatch hasn’t been announced, all we can go with are rumors, and those run from an iWatch being a simple fitness band to a full-time iPhone accessory to a stand alone product. Not many are predicting the latter and it doesn’t really seem likely.

    As a fitness band, it’s going to have limited appeal only to Apple’s existing iPhone user base. 500 million iOS devices sold to date, some fraction of which are active, some fraction of those users are active enough to want a fitness band.

    Going with 200 million iPhones in use, and maybe 1 in 4 users being active, and a 40% grab of those, you’re looking at 20 million units. Figuring a $50 profit per unit, and you’re adding $1 Billion in profit before other related expenses.

    Those numbers could be off here or there, but even doubled at $2 Billion, it’s not that much money relative to Apple’s total bottom line.

    Suppose it’s more than just a fitness band and a full-time accessory to the iPhone. Ok, that increases the profit per unit, but the higher cost of such an accessory then lowers the number of units sold.

    Regardless of how you look at it, an iWatch is going to have a significantly lower profit per unit than the iPhone, iPad, or even some iPods.

    The addition of 20 million iWatch units per year at $50 bottom line profit (including all expenses) would result in a bump in the stock price of $14.62 giving today’s valuation.

    That doesn’t mean it won’t be successful, or that it won’t sell in the tens of millions per year, or that it would bring in additional revenue from app sales and more importantly from expanding the ecosystem and halo effect, but as a direct measurement in of itself the impact should be minimal.

    Again let me emphasize that this is all based on speculation of outcome based on rumors of the iWatch. Apple could produce something completely transformational and disruptive which changes all of this.

  3. We are hearing multiple rumours that the next article that J. M. Manness writes for Seeking Alpha will be yet another article whose added value is mostly a novelty. Of course some may want it as such, but for the average person, it will never be that desired…

  4. N O T ! Oh please make it stop. An Apple health thingy is probably inevitable, and I now it will be in the top two best products of all time in its class, but it isn’t going to make or break Apple.

    Seriously, can we move on.

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