Citing Citigroup analyst Oliver Chen, Bloomberg reported on Monday that the current gross margins on watch hardware is about 60 percent ? a number four times bigger than the margins on televisions. He views it as a $6 billion opportunity for Apple with "plenty of opportunity for upside."
Artist's rendition of purported Apple smartwatch. | Source: Yrving Torrealba
In fact, Chen believes that if Apple took just a 10 percent share of the watch market, it could earn gross profit of $3.6 billion. A 10 percent share of the PC market, however, would result in just $1.79 billion in gross profits, based on Chen's estimates.
Monday's report also made note that Apple's chief designer Jony Ive has had interest in watches for some time. He owns many high-end models, his team has visited watch factories, and the company also reportedly ordered a number of Nike sport watches in the mid-2000s.
Citing an anonymous source, the report indicated that Apple could launch its own wristwatch as soon as this year. Features said to be under consideration are making calls, viewing caller ID, checking maps, a built-in pedometer, and biometric feedback for information such as heart rate.
Bloomberg first reported last month that Apple allegedly has a 100-person team working on an unannounced smartwatch product. The team reportedly includes marketing, software and hardware personnel who previously worked on the iPhone and iPad.
It's been speculated that that the sheer size of Apple's purported "iWatch" team is a sign that the company's plans for wearable computing have gone beyond the experimentation phase and are set to become an actual commercial product.
Reports of an Apple watch picked up steam last month when The New York Times said Apple was experimenting with a "wristwatch-like devices made of curved glass" that run iOS and can perform minor smartphone operations.
Apple may be planning to enter the wristwatch space as a number of products have begun to hit the market and generate buzz. The Pebble watch recently began shipping to consumers, while a consumer-oriented version of the MetaWatch has been shipping to customers since late last year. Both products rely on connectivity to a smartphone to deliver information like phone calls, text messages, weather and more.