How Apple iWatch can be a source of money

tech_apple How Apple iWatch can be a source of money Few prophecies play and technology are as discredited as Dick Tracy watch. From the first crime stopper tied in two-way radio in 1946, the corporate giants have spent millions of dollars experimenting with wrist-mounted computers to their customers do not want. From Casio calculator watches in the 1970 mini-keyboard to Seiko models in the 1980s and (MSFT) Microsoft Web clocks connected to a decade ago, the public has always rejected such devices as novelties geek. While Sony (SNE) still sells a line of $ 129 SmartWatches that can be used for email, Twitter, or listen to music, did not sell many. Within this graveyard of empires technology steps Apple (AAPL).

A team of about 100 is working on Apple’s stab at a smart wristwatch, which the company expects to introduce in the fall, according to a person familiar with the plans. In addition to the normal time, the person says, the gadget will likely serve as an accessory iPhone, allowing users to make and receive calls or check the map coordinates and leave the phone in your pocket. Other features include a pedometer and possibly a heart monitor. U.S. Patent and Trademark Office revelations indicate that Apple has filed at least 79 patent applications since 2001 that include the word “doll”, one for a device with a flexible screen powered by kinetic energy.

This is more than arrogance, Bloomberg says research analyst Anand Srinivasan. If Apple can persuade the public to accept a substitute iWatch as a conventional watch, has a good chance of a business with gross margins of around 60 percent, four times higher than comparable TVs and most profitable product Company, the iPhone. Laurence Balter, chief investment strategist for investment research Oracle says an iWatch can expect iPhone-like gross margins of 50 percent to 50 million units sold in six months. Former Nike (NKE) Global Creative Director Scott Wilson says a $ 125 sports watch of the BOM seller could cost less than $ 50. Citigroup (C) analyst Oliver Chen says that the entire watch business can expect global sales of more than $ 60 billion this year, and “this may be a chance of $ 6 billion for Apple.” The trick, he says, is to design “something consumer’s did’t even knows they needed.”

Apple has prevailed earlier in markets where others have failed. There were plenty of digital music players before the iPod, smart phones before the iPhone, and tablets before the iPad. It is the only company angling for entry into the mobile computing market called, however. Palo Alto-based technology startup Pebble got tens of thousands of pre-orders for SmartWatch $ 150, which connects to the user’s smartphone wirelessly and displays call notifications and previews of the e-mails and texts. Pebble watch is compatible with Apple and Google (GOOG) software, as well as similar products sold by marciano watches and Meta startups and startup Smartfitty slope.

Conventional watchmakers seem less interested in developing their own smartwatches. Fossil (FOSL) CEO Kosta Kartsotis said during an earnings call last month that while his company has looked to make smartwatches, it has been concluded that the real money is still in the old school watches.

Apple could use a boost. Since its peak in September, the company’s stock has fallen by more than a third to $ 425 due to concerns over slowing iPhone sales and competition led by Samsung Electronics. The SmartWatch seems to have been a longtime dream for Apple designs Chief Jony Ive, a lover of luxury watchmaking. In the mid 2000s, he sent his team to keep factories and Scott Wilson asked to send a box of Nike sports watches, Wilson says. (Ive could not be reached for comment.)

It is less clear that Apple can persuade others to share the dream of Ive, especially if the watch turns out to be a peripheral that still requires users to whip out your phone, for example, respond to a call or a tweet. Still, says NPD Group analyst Marshal Cohen, if a company is equipped to close the deal, is Apple. “They have the opportunity,” says Cohen, “for everyone who owns a cell phone to go out and buy another watch.”

The bottom line: Apple’s attempt to make a successful SmartWatch is unprecedented, but the device has potential margins of 50 percent or more.


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