Apple Inc. (AAPL) Smart Watch: A Key Product Addition?

Apple Inc. (AAPL) Smart Watch: A Key Product Addition?
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Apple Inc. (NASDAQ:AAPL) is said to be planning a smart watch, or iWatch, as some are calling it, and now analysts are lining up to make their predictions about it. Today Citigroup Inc. (NYSE:C) analyst Oliver Chen told Bloomberg that an iWatch could be just the product Apple Inc. (NASDAQ:AAPL) needs to turn things around. Earlier this year Gene Munster predicted that the device would replace smartphones and be a key addition to Apple’s product line. Like Munster, Chen also believes the smart watch would be an important addition to the tech giant’s offerings.

Apple Inc. (AAPL) Smart Watch: A Key Product Addition?

He expects the watch industry to generate over $60 billion in sales globally this year. While he does say that amount is lower than the revenue for television sets, which Apple Inc. (NASDAQ:AAPL) is also said to be working on, Bloomberg Industries analyst Anand Srinivasan said gross profit margins on watches are approximately 60 percent, which is four times larger than the gross margins on television sets. According to Chen, an iWatch could create a “$6 billion opportunity,” especially if the product is something completely new.

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Apple Inc. (NASDAQ:AAPL) has filed for almost 80 patents which use the word “wrist.” One of those patents is for a flexible screen and a device runs on kinetic energy. The company could release its smart watch as early as this year, possibly before the long-rumored smart TV.

On Monday, Munster released a report saying he thinks that when it comes to the new wearable computer market, Apple’s iWatch won’t do as well as Google Glass. He believes Google Inc (NASDAQ:GOOG)’s Glass will outpace Apple’s smart watches because they enable the wearer to be seamlessly connected to the features, while smart watches operate more like a smartphone. Bloomberg reported a list of possible features and specs for Apple’s iWatch, and so far, it sounds like the watch would, indeed, operate more like a smartphone than Google Inc (NASDAQ:GOOG)’s Glass will.

Some smaller companies are already planning smart watches that work on iOS and Google software, so we will likely see Google smart watches in addition to Apple’s iWatch. According to Bloomberg, Pebble Technology, Meta Watch Ltd. and Martian Watches are working on watches that would run on both platforms.

Shares of Apple Inc. (NASDAQ:AAPL) are trading mostly flat pre-market after falling more than 2 percent on Monday, lowering the company’s market cap below $400 billion for the first time since 2011.

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