If Apple were to make its own smartwatch, or iWatch, it could sell between 5 million and 10 million units the first year it's available, according to Piper Jaffray analyst Gene Munster. His estimate comes from talking with almost 800 people about the rumored device, and while he doesn't see the watch as a major contributor to Apple's bottom line, he thinks it'll still be an important addition to the company's product lineup.
Analyst Gene Munster thinks Apple could sell up to 10 million iWatches
Mr. Munster's data set came from interviewing 799 consumers who were all asked the same question: Would you buy a smartwatch that connected to your iPhone and cost US$350. Based on his question, he found that 12 percent of the people asked said they would, while 88 percent said they wouldn't.
Based on his findings, Mr. Munster said,
If you assume that Apple sells 7.5 million units in the first year (midpoint of our 5-10 million unit range) at an ASP of $350 and a 30 percent gross margin, it would increase our 2014 revenue estimates by $2.6 billion, or 1 percent, and gross profit dollars by $790 million or 1 percent.
Mr. Munster assumed that some people saying they would by the mythical iWatch actually wouldn't, he dropped his sales estimates down to between 2 percent and 4 percent of current iPhone owners, according to Fortune. He also assumed Apple would ship the device some time in 2014.
He added, "While we do not view the watch as a likely needle-mover for Apple in terms of revenue in 2014, we put it in a similar category as the television in that it could demonstrate Apple's ability to innovate (good for the multiple) and potentially lead to a more meaningful new product category in wearable tech."
Despite the excitement in an Apple-branded smartwatch, there isn't a lot to show that such a device is actually coming to a store near you. Apple does hold some wearable tech patents that show wrist-based devices, and it snapped up the iWatch trademark in several countries, too. Grabbing the iWatch name, however, doesn't necessarily mean the company is going to release a wrist-based device. It could simply be a move on Apple's part to keep other companies from using the name, and would make for a nice diversion while competitors frantically rush to beat the company to market with their own smartwatches.
Samsung has already taken the bait and released Galaxy Gear smartwatch, which isn't getting glowing reviews. The device offers limited features, poor battery life, and is an expensive accessory for just a handful of Samsung's own mobile devices.
So far, smartwatches aren't proving to be as big a thing as manufacturers would like. Apple hasn't jumped into the wearable tech game yet, and that may be part of the reason the wrist top devices haven't taken off: The need these devices fill hasn't been defined yet, and won't be until Apple jumps into the market.