Apple predicted to sell 'iWatch' to at least 10% of existing iPhone users in 2015

Posted:
in AAPL Investors edited June 2014
With Apple widely expected to launch a wearable "iWatch" later this year, market watchers have begun to speculate exactly how many wrist-worn devices the company could sell, with one new projection pegging the device with at least 10 percent penetration among iPhone users in the first full year.


"iWatch" concept render by Martin Hajek.


With an estimated active iPhone installed base of 335 million users by the end of 2014, analyst Keith Bachman of BMO Capital Markets believes Apple could sell at least 33.5 million of a so-called "iWatch" in calendar year 2015. That figure, revealed in a note to investors this week obtained by AppleInsider, represents the analyst's low-end projection.

If Apple were to somehow tap in to 15 percent of existing iPhone owners, it would mean sales of 50.3 million "iWatch" units. And if 20 percent of the projected iPhone installed base were to buy, Apple would sell 67 million units in 2015.

Bachman's figures assume an average selling price of $250 per unit with gross margins around 25 percent. With those projections, he believes 10 percent penetration among iPhone owners would add 3.1 percent to Apple's calendar year 2015 earnings per share, while 20 percent adoption would add 6.2 percent to 2015 EPS.




"We think a key driver of adoption will be meaningful applications," Bachman wrote. "We believe that the initial focus will be health and fitness applications, but to reach 20% adoption levels, Apple will need to have more applications than just health and fitness, to include applications for professional/work usage."

BMO Capital Markets has maintained its "outperform" rating for AAPL stock with a newly revised price target of $98, reflecting the 7-for-one split that occurred with shares on Monday.

Rumors of an Apple "iWatch" have proven so persistent that many on Wall Street, such as Bachman, are treating it as an inevitability. Reports have pegged the device for an October debut, which would make it available to purchase in time for the lucrative holiday shopping season.

One report from earlier this month claimed that Apple was "confident" in the product, and planned to build up to 5 million units per month. If the company were to maintain that pace throughout 2015, that would mean shipments of 60 million units -- on the high end of Bachman's prediction.

That same report claimed that the "iWatch" will sport a curved OLED touchscreen, and that it will track sleep activity, blood oxygen levels, blood glucose, and even aid in keeping tabs on calorie consumption. The device is also expected to connect to a user's iPhone, allowing them to read messages and accomplish tasks without pulling the device out of their pocket.

If Apple were to sell even Bachman's low-end prediction of 33.5 million "iWatch" units, it would likely represent the most successful product launch, in terms of units sold, in the company's history. The first-generation iPad was considered a major success when it debuted in 2010 and sold 14.8 million units in its first 12 months. In comparison, the first-generation iPhone sold just 6.1 million units in its first year.
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Comments

  • Reply 1 of 43
    wolfhow1wolfhow1 Posts: 10member
    One can only hope they won't look like that!!!
  • Reply 2 of 43
    SpamSandwichSpamSandwich Posts: 30,994member
    These analysts should cram their iWatch predictions.
  • Reply 3 of 43
    solipsismxsolipsismx Posts: 19,566member
    These articles make me sad. There is no scientific method involved. It's wishes and desires compiled by even more guesses which is no different than school children sitting around talking about what think would be cool, except this info Is sold as an authority which puts it in the categorry of shysters such as psychics and fortune tellers.
  • Reply 4 of 43
    All these MartinHajekInsider concepts are way off base. You'll see. Like those pre-iPhone "iPhone concepts" or pre-iPad "iSlate tablet concepts".
  • Reply 5 of 43
    macxpressmacxpress Posts: 4,823member

    Yet more bullshit predictions based on nothing! Why do these get posted? Who really cares about bullshit predictions based on hopes and dreams that are wrong 99% of the time?

  • Reply 6 of 43
    samiamsamiam Posts: 27member
    Watches like this are not inherently a bad idea. People have been wearing wrist watches for 100 years, [B]but[B][/B][/B] I saw a galaxy watch on a wrist yesterday and I'm sorry, but it was a bright and gaudy dork beacon. It was so big and bright it just turned me right off. I would never wear something like that. Most watch designs are subtle and understated. They serve a function without drawing attention to themselves. Before you jump on me, I know there are exceptions to every rule and bling is big in some cultures. Take a look a Patek Philippe or Rolex for classy and understated.

    Galaxy gear screams dork almost as loudly as google glass. They are almost giving galaxy watches away free here in canada $50 with a new phone.

    I'm just saying the watch has to be functional and understated. This is something apple excels at.
  • Reply 7 of 43
    rob53rob53 Posts: 2,010member
    Quote:

    Originally Posted by wolfhow1 View Post



    One can only hope they won't look like that!!!

    I second that motion. I don't wear a watch anymore (retired) and if I did, I'd wear my fashionable Swiss Army watch with red dial. I don't need to know the exact time all the time. Is the sun up? Then it must be daytime.

     

    If I were to get an "iWatch" I'd want to make sure it was very minimal, didn't make my wrist sweat, was absolutely waterproof (not just water resistant), shock proof, and did more than just show me the time (not much more than this however). What I don't need it to do is play music, show me the weather (I'm in the weather), or check email or iMessages. I wouldn't mind it checking my blood pressure and hear rate and monitoring for odd fluctuations, reporting those to my Mac and possibly to a health service. I'm not a kid so I have to start thinking about a health monitor for when I really get old.

  • Reply 8 of 43

    I agree with the numbers....

     

    EXCEPT for the assumption that there will be a 10% sell through.

     

    And the ASP.   

     

    The $250 for 'an accessory' won't cut it.    If it's over $199 I'll be surprised, given that a new phone in the US costs that much.

    10% is high for 2015...   First off, no one with a 4, 4s, and likely a 5 will be able to use them to their full potential (I think the m7 chip will be critical), which means only 25% of the installed base (by their numbers, maybe 75M) will buy... and then maybe 25% of the new buyers of the iPhone 6 (and 6c) (75M)...  

     

    So by my guess... it will be more like 5% sell through... and I'm guessing $149 ASP...  so instead of .22 a share, it will be more like .05 share.   At $100/share...   That's almost background noise.

     

    The key to looking at iWatch is Apps (and icloud storage).   Health Apps will be much more expensive... $10/$100, and likely an annual renewal fee, especially if there is any sort of insurance (think medicare) reimbursement.   If you buy 3 $33 apps... that's $30 retained revenue, probably $15 gross profits.  A Year.   also getting likely $5  from 50% buying iCloud to save their EKGs to the cloud.... forever.  So that initial $149 (likely $50 gross profits) over a 3 year life span makes you about $120.  On top of your current capitated AppStore purchases.   That's like selling hardware at 85% margin.

     

    Give away the razor, sell the blades.

  • Reply 9 of 43
    pazuzupazuzu Posts: 1,728member
    Everyone needs a phone; no one needs a watch. This will surprise me if it's a big seller.
  • Reply 10 of 43
    Quote:

    Originally Posted by pazuzu View Post



    Everyone needs a phone; no one needs a watch. This will surprise me if it's a big seller.

     

    Baloney.  Nobody needs a phone.  They didn't even exist until the mid 1800s.  And yet the species evolved anyway.  Don't confuse need with want.

  • Reply 11 of 43
    pazuzupazuzu Posts: 1,728member
    Baloney.  Nobody needs a phone.  They didn't even exist until the mid 1800s.  And yet the species evolved anyway.  Don't confuse need with want.

    You don't need a watch anymore if your phone can tell you the time. A watch was a necessity to tell what time it was. How else could you?
    People have always needed to communicate -prior to phones people used pigeons and your point is?
  • Reply 12 of 43
    solipsismxsolipsismx Posts: 19,566member
    pazuzu wrote: »
    You don't need a watch anymore if your phone can tell you the time. A watch was a necessity to tell what time it was. How else could you?
    People have always needed to communicate -prior to phones people used pigeons and your point is?

    So your argument is that any iWatch from Apple only have a benefit of being able to tell time and no other capabilities thay make it useful in its own right. Sounds like you really thought this through¡
  • Reply 13 of 43
    slurpyslurpy Posts: 5,118member

    Why does AppleInsider propagate this absolute drivel? Not a single fucking person outside of an inner circle at Apple knows if the iWatch exists, what it looks like, or what the features might be. Not to mention cost. Yet every fucking day there's an article about sales predictions? And AI publishes this shit?

  • Reply 14 of 43
    hillstoneshillstones Posts: 1,490member
    Quote:

    Originally Posted by macxpress View Post

     

    Yet more bullshit predictions based on nothing! Why do these get posted? Who really cares about bullshit predictions based on hopes and dreams that are wrong 99% of the time?


    You are on a RUMOR website.  Their goal is to post stories of this nature, pure speculation without fact.  If you don't like it, go over to Macworld.

  • Reply 15 of 43
    An iWatch or some sort of wearable device is coming - make no mistake about that. Hopefully for the sake of the fashion conscious freaks and for the sake of shareholders, Apple will find a way to add value to it - like a choice of strap colours at €50 a pop.
  • Reply 16 of 43

    This wearable's thing is going to turn into another market share pissing contest by the news media and Wall Street.  I honestly don't understand why everything is about market share.  If Apple were to sell 30 million wearable devices they would instantly take major market share and then it'll constantly be about how Apple is losing market share to Samsung and Motorola and Pebble or whatever.  Why can't the focus be on how good the devices are for consumers?  Samsung dominates the wearable's market after flooding it with Galaxy Gear 1 & 2.  More power to them.  They're probably selling as many as the market can bear.  Not great but better than nothing.

  • Reply 17 of 43
    pazuzupazuzu Posts: 1,728member
    solipsismx wrote: »
    So your argument is that any iWatch from Apple only have a benefit of being able to tell time and no other capabilities thay make it useful in its own right. Sounds like you really thought this through¡


    No I'm simply saying that unlike the iPhone which is a necessity (communication) no one can state how an iWatch would warrant that description- to obsess on one's constant health monitoring? That's a necessity ? This if anything is a want product not a need product.
  • Reply 18 of 43
    jungmarkjungmark Posts: 6,679member
    How did they get this estimate? Oh yeah, I saw an analyst bent over with another analyst pulling a number out of the first one's ass.

    There is no iwatch and we don't know what it does.
  • Reply 19 of 43
    wizard69wizard69 Posts: 12,752member
    I have no idea what Apples sales will be like, however if some of the rumors are to be believed I don't even see how it is remotely possible for Apple to sell this watch for$150 as some have suggested. Some of the rumors imply really advanced electronics packaging that in and of itself is expensive. Beyond that I can see Apple reaching for Gross margins that exceeded all previous products to match what is seen in the jewelry industry. In other words I'd be shocked to see a cheap iWatch.

    Beyond all of that I don't see the demand there, in the numbers being thrown about. It comes back to this, who needs to keep track of all of these bodily parameters? If you have a medical condition the device would have to be regulated by the FDA, Which might actually spur sales if Apple can validate a product that is better than what we have today. However Apple has no experience with the regulated world. If the device isn't regulated as a diagnostic machine then it is only of value to people that think they are sick.
  • Reply 20 of 43
    pazuzupazuzu Posts: 1,728member
    wizard69 wrote: »
    I have no idea what Apples sales will be like, however if some of the rumors are to be believed I don't even see how it is remotely possible for Apple to sell this watch for$150 as some have suggested. Some of the rumors imply really advanced electronics packaging that in and of itself is expensive. Beyond that I can see Apple reaching for Gross margins that exceeded all previous products to match what is seen in the jewelry industry. In other words I'd be shocked to see a cheap iWatch.

    Beyond all of that I don't see the demand there, in the numbers being thrown about. It comes back to this, who needs to keep track of all of these bodily parameters? If you have a medical condition the device would have to be regulated by the FDA, Which might actually spur sales if Apple can validate a product that is better than what we have today. However Apple has no experience with the regulated world. If the device isn't regulated as a diagnostic machine then it is only of value to people that think they are sick.

    Well said.
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