Ap­ple’s iWatch: boom or bust?

Financial Mirror (Cyprus) - - FRONT PAGE -

Ru­mours have been cir­cu­lat­ing all week about Ap­ple’s smart­watch, the tech gi­ant’s first se­ri­ous ven­ture into wear­able de­vices. Tech-savvy traders must now de­cide how to best re­act to the mur­murs and the mar­ket an­tic­i­pa­tion.

Ac­cord­ing to in­dus­try in­sid­ers, Ap­ple plans to re­lease mul­ti­ple ver­sions of its “iWatch” (as the me­dia are call­ing it), launch­ing as early as Oc­to­ber this year. The prod­uct will di­rectly com­pete with Google, Sony, Sam­sung and a num­ber of start-ups who have also turned to smart watches and wear­able de­vices. The firms hope to profit from this new mar­ket of small sen­sors, flex­i­bil­ity screens, and wire­less con­nec­tiv­ity be­tween de­vices. Ap­ple’s watch is re­ported to in­clude a 2.5-inch touch screen and wire­less charg­ing.

Is there enough con­sumer de­mand, how­ever? Af­ter all, even the most ba­sic phone can tell the time. Just 2 mln smart­watches were pur­chased last year ac­cord­ing to Strat­egy Anal­y­sis. That’s a tiny frac­tion of the 50 to 60 mln units that Ap­ple aim to sell in the first year of its prod­uct’s re­lease, ac­cord­ing to re­ports in Reuters and the Wall Street Jour­nal.

It is of course pos­si­ble that Ap­ple’s es­ti­mates are overly keen as part of its at­ten­tion-grab­bing mar­ket­ing strat­egy. Nonethe­less, there is suf­fi­cient rea­son to be­lieve that if any firm can break so strongly into this mar­ket, and in ef­fect cre­ate the mar­ket, then Ap­ple can. CEO Tim Cook has pledged to push wear­able de­vices, stat­ing at a con­fer­ence last year that “there are lots of gad­gets in this space right now, but there’s noth­ing great out there.”

Ap­ple’s think­ing seems to be to outdo sim­i­lar prod­ucts by pro­duc­ing not sim­ply a watch but a health and fit­ness ac­ces­sory. Aside from its in­cred­i­bly loyal fan base, the com­pany’s abil­ity to de­sign both soft­ware and hard­ware will give it a com­pet­i­tive ad­van­tage, as well the fact that it has re­port­edly hired sev­eral de­sign­ers and en­gi­neers from the fash­ion and med­i­cal in­dus­tries.

It is said to be work­ing on us­ing as many as ten ad­vanced sen­sors to track data such as blood pres­sure and hy­dra­tion lev­els. A re­port on the 9to5Mac blog re­veals that the firm is em­ploy­ing pro­fes­sional ath­letes to test the fea­tures on its up­com­ing de­vice, leading to spec­u­la­tion that the same sports­men will also help to pro­mote the end prod­uct.

Talk about the watch will feed the ap­petites of in­vestors who have been ques­tion­ing what Ap­ple’s next ma­jor prod­uct launch will be. It in­di­cates that the firm is not sim­ply re­ly­ing on share buy­backs and stock splits, but is also re­turn­ing to its in­no­va­tive roots in or­der to in­crease its share price.

At present, Ap­ple is set to grow earn­ings by over 10% this year, but that fig­ure could cer­tainly fluc­tu­ate. Al­though the i Watch could be an added source of in­come to com­pen­sate for the slow­ing growth in tablet and phone sales, it re­mains to be de­ter­mined ex­actly how strong the sales of the prod­uct will be. Over the com­ing months, as more de­tails about the de­vice is leaked, in­clud­ing func­tion­al­ity and price points, traders should watch out for data on con­sumer de­mand and real­is­tic sales tar­gets.

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