A “Nixie” watch as worn by Steve Wozniak, co-founder of Apple, Inc. (Photo credit: Wikipedia)
I admire the way Apple AAPL +0. 49% used to innovate — that's to introduce an obviously better product into a big existing market and take a large share of its profits. Last time Apple innovated was a student in January 2010 when it started selling the iPad.
Some suggest that the iWatch will be the next Apple creativity — yielding $9 million in revenue. Will it be? If IDC is actually right about how big is the market, the answer is probably not.
Before getting in the answer, what might an iWatch complete? Based on the Morgan Stanley MASTER OF SCIENCE +0. 16% research note it seems like the answer is a variety of telling time and monitoring your wellbeing and physical activity. Morgan Stanley’s Kate Huberty had written: “In our view, Apple will introduce a tool with more sensors, and better style factor and good looks than competing devices already in the market priced at $100-250. ”
That would represent once or twice more than how big is the total market if IDC is actually correct. IDC claims how the market will reach an overall total of 19. 3 million units within 2014. From there, the global market will grow with a 78. 4% 12-monthly rate to 111. 9 million units by 2018.
IDC estimates how the Pebble smart check out, Samsung Galaxy Tools, and the Sony SmartWatch will end up significant players and that it doesn't be until 2016 how the smart wearable market reaches in the millions of units shipping.
How big a possibility does this signify for Apple? Using “historical penetration of past iDevice[s]” Huberty believes how the answer ranges among 30 million in addition to 60 million devices inside first 12 months after it's introduced — and that is between 1. 5 in addition to 3. 1 times bigger than the total 2014 market if IDC is actually right.
Estimating the revenue for Apple depends on what price people would cover the iWatch. One tiny sample measurement survey done by Piper Jaffray of 10 people about watches and wearables revealed of which 14% would pay $350 while 30% would buy the one which ranged in price from $100 to $200. Piper Jaffray also found that 41% won't buy an iWatch from any price.
Can Apple introduce a product or service that is vastly superior to the ones already available on the market? Canalys’s research on 1st quarter 2014 wearable device sales suggests that Apple will face tough competition from many competitors.
Fitbit controls nearly 50% in the 2. 7 million unit wearables market inside first quarter of 2014. Jawbone is another strong competitor while Nike’s FuelBand — which suffered a 10 percent point market share drop inside first quarter — is actually fading.
In the smartband message — which amounted to be able to under 500, 000 units in the first quarter — Apple would have to wrest share from Pebble using 35% — beating Samsung whose share dropped to 23% inside first quarter and Sony, as outlined by Canalys.
This leads towards question of whether Apple mackintosh will indeed get $9 billion in revenue through the rumored-to-be-announced iWatch. The answer is so it depends on whether Apple introduces the product or service, how many units this sells, and what price people money.
If we assume that folks will pay $200, then Apple would have to sell 45 million ones to hit $9 thousand. A $300 price would require Apple to promote a mere 30 zillion iWatches. If we assume that Apple starts to promote these devices in 2015 in addition to apply IDC’s growth rate — next the total market will reach 34 million next yr.
In short, it looks like Morgan Stanley’s assumptions pertaining to iWatch sales would require Apple to instantly control between 88% and 132% in the total wearables market in case IDC is right.
I not think this is plausible in different market. To be reasonable, it’s possible that Morgan Stanley carries a better forecast for the market size than IDC.
Nor do I imagine that Apple will take a huge amount of market share within a year of launch from competitors that already make very popular products.
In short, the iWatch is many hype and no delivery at this time. I would be amazed if it becomes Apple’s up coming innovation yielding $9 thousand in revenue.
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