Morgan Stanley sees 'iWatch' ringing up $17.5B from iPhone users in first year

Posted:
in Future Apple Hardware edited February 2014
Apple's entry into the wearables market with a so-called "iWatch" could be an extremely profitable move for the company, with one investment bank predicting that the device will add up to $17.5 billion to Apple's coffers in its first year of sales.

iWatch
iWatch concept by Todd Hamilton


The estimate came in a Tuesday morning research note to investors from analyst Katy Huberty of Morgan Stanley. Huberty believes first-year sales of the wrist-worn device would outstrip even the iPad's impressive $12 billion debut.

Central to Huberty's thesis is Apple's positioning of the iWatch as a natural accessory to tens of millions of existing iOS devices rather than as a fledgeling product category like the iPod and iPhone were when they were first introduced. This would open the market to existing owners of the iPhone and iPad, she argues, as well as first-time Apple mobile device buyers.

Huberty's $17.5 billion first-year figure assumes an average selling price of $299 and no supply chain constraints. If supplies of the device were constricted, she believes revenues would fall to a still-imposing $10 billion to $14 billion.

Though Apple has yet to announce the so-called iWatch, many Apple watchers --?including Huberty --?believe that Apple's continued investments in infrastructure and research and development foretell the company's entrance into the market. The company posted 30 percent year-over-year increases in research and development spending from 2010 to 2013, and capital expenditures are poised to rise significantly.

Apple's "guidance for $10.45B of capital expenditures (non-cash and excluding retail stores) for FY14, which Apple just reaffirmed in the latest 10-Q, is up 32% from $7.9B in FY13. We believe this is an indication that Apple is investing in new product categories as single-digit iPhone and iPad growth no longer demands significant increases in capital expenditures," Huberty wrote.

Apple is believed to have a team of more than 100 working on the iWatch, which is expected to contain advanced biometric capabilities. The company has added a slew of fashion and medical industry veterans in recent months --?including former YSL CEO Paul Deneve, Nike design director Ben Shaffer, and medical devices veteran Michael O'Reilly --?who are thought to be focused on the device.
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Comments

  • Reply 1 of 79

    Very impressive for a make believe product.

  • Reply 2 of 79
    jungmarkjungmark Posts: 6,634member
    So WS predicts boffo $$$ for an imaginary product so it can drive Apple's stock down in reality when this product is "delayed" or "cancelled."
  • Reply 3 of 79
    From press release to "article."
  • Reply 4 of 79
    clemynxclemynx Posts: 1,509member
    That concept truly nailed how Apple products look like. It looks so shiny, rounded and soft. The screen won't be that size, but that may be the best concept I've ever seen. The bracelet is exactly like what I imagined for the iwatch myself. Just a big ring. What's simpler than that?
  • Reply 5 of 79

    Bull! And, this reaction is just from the title!! Apple has not even announced a product!!! I have a morbid interest in reading the asinine crap the analyst is spewing.  :-(((

  • Reply 6 of 79
    sudonymsudonym Posts: 233member
    Quote:

    Originally Posted by AppleInsider View Postositioning of the iWatch as a natural accessory to tens of millions of existing iOS devices rather than as a fledgeling product category like the iPod and iPhone were when they were first introduced. This would open the market to existing owners of the iPhone and iPad, she argues, as well as first-time Apple mobile device buyers.

     

    I don't understand this.  The iPod was not a "fledgeling" if that means a stand-alone product.  It was introduced as an accessory to the Mac.  Without a Mac, the product was a boat anchor.  The iPhone too was not introduced as a stand-alone.  It too needed a computer to sync.  

     

    And introducing the watch as an accessory to the iPhone would "open the market" more than if it were a "fledgeling"?  

     

    Sorry.  I don't understand what she is saying. 

  • Reply 7 of 79

    .................... Katy Huberty  <full stop>

  • Reply 8 of 79
    Katy Huberty. What a maroon.
  • Reply 9 of 79
    I have a real problem with an analyst predicting income on a product that has not been announced. Apple has not even confirmed that they are making an iWatch. My prediction: Apple will create a flying starship in 2015 that will sell for $199 and create $83.69 million of profit in the 1st week.

    You heard it here first.
  • Reply 10 of 79
    I have a real problem with an analyst predicting income on a product that has not been announced. Apple has not even confirmed that they are making an iWatch. My prediction: Apple will create a flying starship in 2015 that will sell for $199 and create $83.69 million of profit in the 1st week.

    You heard it here first.

    Did you mean revenue or profit? Because if you meant revenue, then I will downgrade AAPL to underperform on weak sales of only 420,000 starships. An area ripe for growth
  • Reply 11 of 79
    bulk001bulk001 Posts: 438member
    justp1ayin wrote: »
    Did you mean revenue or profit? Because if you meant revenue, then I will downgrade AAPL to underperform on weak sales of only 420,000 starships. An area ripe for growth
    :) to you and Apple Investor.
  • Reply 12 of 79
    irelandireland Posts: 17,539member

    Not even an idiot would trust the advice of that company.

  • Reply 13 of 79
    jungmarkjungmark Posts: 6,634member
    I have a real problem with an analyst predicting income on a product that has not been announced. Apple has not even confirmed that they are making an iWatch. My prediction: Apple will create a flying starship in 2015 that will sell for $199 and create $83.69 million of profit in the 1st week.

    You heard it here first.

    That's it? SELL! SELL! SELL!
  • Reply 14 of 79
    Quote:

    Originally Posted by leavingthebigG View Post

     

    Bull! And, this reaction is just from the title!! Apple has not even announced a product!!! I have a morbid interest in reading the asinine crap the analyst is spewing.  :-(((


    I read the story and remembered last year's sudden discovery of millions upon millions of "white box" tablets that had miraculously entered into the marketplace. Katy was one of the analysts who lowered her iPad estimates due to the discovery of the tablets. IF Apple does come out with an "iWatch" this that racks up BILLIONS of dollars and MILLIONS of sales as Katy predicts, why do I have the cynical feeling Katy and crew will find a way to promote "white box" watches having eclipsed "iWatch" sales and earnings some time in 2015?

  • Reply 15 of 79

    Morgan Stanley's prediction of only $17.5B was below the Street's expectation of at least $19.7B for the iWatch in 2014, which caused Apple stocks to plummet 17% in the first 10 minutes after the announcement.

  • Reply 16 of 79
    mvigodmvigod Posts: 172member
    And so begins the analysts dartboard throws
  • Reply 17 of 79
    sudonym wrote: »
    I don't understand this.  The iPod was not a "fledgeling" if that means a stand-alone product.  It was introduced as an accessory to the Mac.  Without a Mac, the product was a boat anchor.  The iPhone too was not introduced as a stand-alone.  It too needed a computer to sync.  

    And introducing the watch as an accessory to the iPhone would "open the market" more than if it were a "fledgeling"?  

    Sorry.  I don't understand what she is saying. 

    I believe that she is suggesting that an "iWatch" that somehow extends the capabilities of an iPhone will be a very popular device as opposed to "only" a fitness and health accessory. For example, an "iWatch" that presents notifications and enables the user to act upon notifications without directly using their iPhone would essentially extend the battery life of an iPhone for many users.

    In my opinion, the two killer features possible with an iWatch are extending the battery life of the iPhone and offering additional security capabilities (either biometric heartbeat sensor or required pairing with the iWatch for the Apple payment solution ("iWallet") to function). I doubt either of these will occur, however, as this creates dependency on the pairing for the expected "iWallet" solution which seems unlikely.
  • Reply 18 of 79
    I believe that she is suggesting that an "iWatch" that somehow extends the capabilities of an iPhone will be a very popular device as opposed to "only" a fitness and health accessory. For example, an "iWatch" that presents notifications and enables the user to act upon notifications without directly using their iPhone would essentially extend the battery life of an iPhone for many users.

    In my opinion, the two killer features possible with an iWatch are extending the battery life of the iPhone and offering additional security capabilities (either biometric heartbeat sensor or required pairing with the iWatch for the Apple payment solution ("iWallet") to function). I doubt either of these will occur, however, as this creates dependency on the pairing for the expected "iWallet" solution which seems unlikely.

    Actually what I think she means is that with the iPhone and iPod, you needed a computer, but not an iproduct or a Mac, with this new device, it will be made solely for iUsers (iPhone, iPad, etc). Meaning it's not as open to everyone as the previous products
  • Reply 19 of 79
    pmzpmz Posts: 3,433member

    LMAO. A new low for analysts shorting Apple into the ground. A fictional product with fictional market demand and unknown pricing is already forecast to bring in 17 billion in revenue year 1 or its a failure.

     

    Any chance we just stop re-publishing this utter garbage?

  • Reply 20 of 79
    maestro64maestro64 Posts: 4,424member
    Quote:
    Originally Posted by SpamSandwich View Post

    Katy Huberty. What a buffoon.

    Fix that for you....

     

    The total watch market size is not that big to day and continue to decline what makes anyone think it would grow that fast, Apple is not that good.

     

    She must be a good lay, not sure how else you keep your job with such a bad track record

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