One Analyst With Wildly Optimistic Expectations for Apple, Inc.'s iWatch

Apple's alleged iWatch could be a blockbuster hit in the marketplace.

Apr 10, 2014 at 7:05PM

Apple (NASDAQ:AAPL) CEO Tim Cook has managed to keep the details of its alleged iWatch secret. But the one analyst who is likely to have some knowledge of Apple's plans seems to think the smartwatch will be wildly successful in the market place. Well-connected Apple analyst Ming Chi Kuo says (via MacRumors) that he believes Apple could sell as many as 50 million units in 2015.

iWatch details
Based out of Taiwan, Ming Chi Kuo "often provides reliable information on Apple's product lineup," according to MacRumors. With that said, let's explore Kuo's expectations.

iWatch Feature

Description

Display

Two different display sizes, 1.3 and 1.5 inches. This display will be "flexible" and use sapphire crystal to protect the glass from scratches.

Pricing

Multiple price points, with the high-end model priced in the thousands of dollars.

Battery

At least one day of battery life and technology that enables wireless charging.

Functionality

Biometric sensors, integration with iPhone, iPad, and Mac, and an aim to serve as a fashion item.

The impact on Apple's business
Most notable among Kuo's predictions, however, are his thoughts on the product's potential. Expecting Apple to role out the iWatch in the third calendar quarter of 2014, he thinks Apple can sell 5.5 million units this year and 30 million to 50 million units in 2015. This would be quite an achievement for a product Kuo says could have a high-end model priced upwards of $1,000.

With Apple stock literally going nowhere for more than two years, shareholders are hoping Apple CEO Tim Cook's promised "new categories" will serve as a catalyst for the stock. As revenue growth slows and net income growth rates have flattened out, Apple will need to move the bottom line to get the market excited about the stock again. Could the iWatch serve that purpose?

Apple Store China

While investors shouldn't be certain yet that the iWatch can deliver the growth required to move get Apple's bottom line ticking upward again, Cook's proclamation that Apple will launch new categories in 2014 at least helps limits downside risk given Apple's history of successfully entering new product categories.

But the upside potential is definitely significant. Assuming an average selling price of $640 (equal to the iPhone's ASP) for the iWatch, Kuo's median estimate of 40 million iWatch shipments in 2015 could boost the company's 2015 top line by $25.5 billion over today's levels, or by about 14.5%.

Beyond scouring the implications on Apple's financials, the market will also be looking for clues that Apple can innovate as successfully in new categories as it did in the past when famed Steve Jobs was still at the helm. Can Apple revolutionize another new category in the post-Jobs era?

Though there are still many uncertainties regarding Apple's alleged iWatch, one thing is certain: It's Apple's most important product launch in years.

Beyond 2015
The rumored iWatch will almost certainly have huge implications for investors. One hundred of Apple's top engineers are said to be busy building it in a secret lab. And Kuo's projections for 2015 are just the beginning. An ABI Research report predicts 485 million iWatch-like wearable devices could be sold over the next decade. Fortunately there's a way for you to invest in this revolution today... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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