With Samsung launching new TV ads for its recently unveiled Galaxy Gear Smartwatch accessory, smartwatches and other wearable technology seems to be the way of the future. For months now Apple has been rumored to have a team working on a wearable wrist accessory known as the iWatch. The product is expected to be among the next big thing that the company launches, perhaps along with new iPads later in October. As a result many researchers have wondered what the new product will do for the company.
According to Piper Jaffray analyst Gene Munster, Apple could sell up to ten million iWatches in the first year it launches the product, adding more than $2.5 billion to the company's top line and over $750 million in profit.
Apple shares rose 1.7 percent to $491.27 in midday action on Monday according to USA Today.
Munster reportedly asked 799 U.S. consumers whether they would be interested in an Apple iWatch that connected to an iPhone for $350, similar in specs and function to rival Samsung's Galaxy Gear. Of those with an iPhone, 12 percent said they would be interested in the wearable device, while the rest said they wouldn't be interested.
The survey showed that not many people are would actually put up the money for a wearable wrist watch accessory to augment their iPhone experience. As a result, Munster "conservatively" extrapolated from the survey that two to four percent of global iPhone users will purchase the iWatch in the first year it is available, likely 2014.
"With a projected iPhone user base of about 293 million, that suggests first-year iWatch sales of 5 to 10 million units. If Apple ended up selling 7.5 million of the devices at $350 each and with a 30% gross profit margin, that would generate $2.6 billion in revenue and $790 million in profit, Munster estimated" via USA Today.
This would account for only one percent of Apple's annual revenue and profit, meaning the direct impact of an iWatch would probably be very limited. However, the company has been catching criticism recently for its lack of innovations in the wake of the late founder Steve Jobs' passing. An iWatch could inspire confidence in the brand once again and prove that, even with Tim Cook at the helm, Apple is not a sinking ship.
