Will an iOS-Based Apple (AAPL) 'iWatch' Eat Into Other Sales?
According to reports from TheVerge and Bloomberg on Monday, Apple might cannibalize itself via creation of a wristwatch, dubbed the "iWatch."
Apple design chief Jony Ive is said to have ordered "boxes" of Nike (NYSE: NKE) sport watches a few years back, Bloomberg noted. The goal was for engineers to take apart and inspect the devices in hopes of evolving the product into something worthy of the Apple name.
Instead of using the iPad Nano's touch operating system, engineers are expected to port over a version of iOS to run on the iWatch.
TheVerge said that battery life has been an ongoing issue. Though Apple is aiming for a battery that would run four to five days between charges, current prototypes are able to keep a change for only a few days.
Apple may need to release the device before the end of the year as well, with analysts starting to figure a new device into their estimates already. With the global wristwatch industry expected to draw in about $60 billion of sales in 2013, many believe an Apple watch could be more profitable than a TV (as highlighted by the Bloomberg headline today).
One analyst from Citi thinks that iWatch is a $6 billion opportunity for Apple. The TV industry, by comparison, is expected to have about $119 billion in sales this year. Using a 10 percent margin, the Citi analyst sees gross profit for an iWatch at $3.6 billion, about double the $1.79 billion Apple could draw from TV sales.
Investors may be hoping for the best, too; many skeptics have surfaced in recent years since the passing of Steve Jobs that innovation has been lost at Apple. Multiple versions of iPhones, iPads, and iPods can only hold attention for so long before another ground-breaking product would be needed.
But, should Apple be able to debut a new wristwatch this year and if said watch should run on iOS, the question might now be whether or not consumers will need an iPod, iPad, AND iPhone...or could one be cut out.
Going for Apple was a recent Kickstarter project which would turn an iPod Nano into a wristwatch-type device. Given the volume of sales were impressive for the product, Apple simply needs to striking while the coals are hot.
And with Google (Nasdaq: GOOG) looking to launch its own portable computing device in Google Glass, it appears that they've never been hotter. Or stakes higher.
Shares are down 2 percent Monday.