Apple “IWatch” Arriving In 2013

 

Apple’s stock has recently fallen by almost 30%, down from an all-time high of $703 in late 2012.  Despite recording phenomenal earnings, Apple investors are becoming sceptical of Apple’s future plans. Apple is losing their gross margin on the products they sell as components become more expensive and competitors in the industry push Apple to lower their prices.

A new report has outlined Apple’s plans to introduce a smart watch in 2013 which would help reintroduce high margins into Apple’s product categories, thus satisfying investors. Oliver Chen, an analyst for Citigroup, has told reuters that Apple has a “$6 billion opportunity” where they could recreate the success of the iPod; reinvent a market that already exists and make it desirable to the general public. In 2013, the entire watch industry is expected to generate $60 billion, which would enable Apple to catch 10%, equivalent to a gross profit of $3.6 billion. Margins on watches are also much higher, with some manufactures getting up to 60%; the iPhone currently nets Apple a 55% margin.

Apple is reported to have a 100-person team working on their “iWatch”, which may replace some of the tasks currently carried out by the iPhone and iPad. Also Apple is considering the ability for the smart watch to place calls, identify the person making an incoming call, check map coordinates as well as act as a pedometer and heart-rate monitor. As of right now, Apple has filed almost 80 patents which include the word “wrist”, one of which includes a flexible screen and a battery charged by kinetic energy.

Google is currently developing Glass, which will features a small built-in screen which will be viewable in the right eye of the user. However, Glass does not include a 3G radio, effectively chaining it to a smartphone. If Apple included such a radio in their smart watch, they could open up a new brand of “smart” accessory. Jony Ive, Apple’s lead designer, has an interest in watch. Not only has he owned many high-end brands himself, he also took his team to a Nike factory for a tour. Google Glass will be unveiled at the end of 2013/early 2014, while Apple’s inside source is adamant that Apple’s smart watch will be available during 2013, possibly at Apple’s main WWDC event in June.

Another problem Apple faces in regards to a watch is design. People are happy to carry around the same smartphone as everyone else, but a watch is even more of a fashion statement. Apple’s one-size-fits-all mentality may not work in the watch industry where consumers may want different types of straps or different materials. Apple may be forced to offer various models, something they do not like doing.