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Apple will likely sell between 5 million and 10 million iWatch units the first year of the device’s availability, adding more than $2.5 billion in revenue, Piper Jaffray analyst Gene Munster wrote in an Oct. 7 report acquired by USA Today.
Nevermind that Apple has not yet introduced an iWatch nor confirmed that it’s working on a smartwatch.
According to the report, Munster surveyed 799 U.S. consumers (why not 800, Gene, why?) on whether they would pay $350—the price that Munster said Apple is after—for an iWatch that will connect with and complement an iPhone.
Among those in the survey who own an iPhone, 12 percent said they likely would buy the watch, which Munster, accounting for the difference between what people say and what they actually do with their dollars, conservatively estimated to be actually closer to between 2 and 4 percent.
Were Apple to sell 7.5 million iWatch units (the middle ground of the suggested range), at $350 each, with a gross profit margin of 30 percent, it could bring in $2.6 billion in revenue and $790 in profit—which, the report added, is about 1 percent of Apple’s annual revenue and profit.
“While we do not view the watch as a likely needle-mover for Apple, in terms of revenue in 2014,” Munster wrote, “we put it in a similar category as the television [another unconfirmed but expected product] in that it could demonstrate Apple’s ability to innovate.”
Reports of an Apple iWatch have been circulating for years, but now they’re reaching a fever pitch.
In August 2011, Apple filed a patent for a wearable device that could behave like a “slap bracelet”—capable of standing straight or curled around a user’s wrist. This April, Apple posted an ad for an engineer who could lead an “investigation on emerging display technologies.” In August, Apple both filed a patent for the term “iWatch” in Japan and hired Jay Blahnik, an exercise consultant who led Nike’s development of its successful FuelBand bracelet, as well as a 6 million-plus-strong base of digital users.
At an AllThingsD conference in May, Apple CEO Tim Cook called the wearable device market “ripe for exploration.” The better products, he said during an interview, tend to focus on one thing and do it well, rather than trying to do several things—and doing them in a mediocre way.
A member of the Nike board, Cook said he wears the FuelBand and that “Nike did a great job” with it.
Not addressing Google directly, Cook added that he found the wrist an easier sell than glasses, calling a watch a “more natural” way to accessorize, but adding that the entire wearables industry is “going to explode.”
“It’s a little all over the place right now, but [with time] it will become clearer, he added.
On Oct. 8, Display Search analyst David Hsieh, following a visit to Apple’s suppliers in Asia, confirmed that an iWatch is coming, according to BGR. It will feature a flexible active-matrix organic LED (AMOLED) display with a resolution of 320 by 320 pixels, wrote Hsieh.