Predicting the Potential of Apple Inc.'s Alleged iWatch Isn't Easy

Investors beware: Predicting the success of Apple's iWatch may be downright impossible.

Jun 24, 2014 at 6:08PM

In a new report from Piper Jaffray (via AppleInsider), Apple (NASDAQ:AAPL) investors get a closer look at the potential for the company's alleged iWatch -- or do they? While the results are intriguing, can the study be trusted as having any predictive power? Probably not. The most important takeaway of all from the study is simple: Guessing the potential of Apple's iWatch is an very difficult task.


iWatch concept design (as seen on the right) shown next to iPad Air, iPad mini, and iPhone 5s. Image source: 9to5mac, used with permission.

Getting the major drawback to this Piper Jaffray survey out of the way, it's important to note that only about 100 individuals were surveyed. The irrefutably small sample size obviously limits its application.

Then, of course, there is the other limiting major factor in any survey of Apple's upcoming iWatch. While Apple-branded smartwatch rumors have certainly been turned up a notch in recent weeks, even the ever-active Apple rumor mill is still fairly clueless on what the device will look like or even what sensors exactly the device will sport.

Sure, the iWatch may end up matching the description of some of the recent reports to surface about the device. For instance, it may have more than 10 biometric sensors, work with Apple's HealthKit app by piggybacking the iPhone, and have a 2.5-inch touch display -- all recent reports. But even if all of these claims end up being true, there is still too much up in the air to enable investors to envision how compelling (or not) the device's value proposition could be.

$350 or less?
Summing up the results to Piper Jaffray's survey, 14% of a fairly high-end group of individuals, with an average household income of $130,000, would buy an iWatch priced at $350.

Taking the study further, Piper Jaffray surveyed the buyers who said they wouldn't buy at $350 to see how they felt about iWatch pricing in general. At what price would this subset consider buying the iWatch? It would be far more popular if it were priced under $200, the results suggested. Thirty six percent of these respondents said they would buy in the $100 to $200 price range -- a higher percentage than any other surveyed category.

Unfortunately, the anchoring bias, in which an individual irrationally "latches" on to the first piece of information (in this case, $350), could have had a large influence on these results.

But combining the fact that only 14% of individuals who were interested in the iWatch initially at $350, and only 36% of the at-first-uninterested consumers would pay between $100 to $200, the study may have a sliver of a chance of indicating Apple will have to do an exceptional job in educating consumers on why they may want to pay up for the device.

Apple Store Tmf

iWatch pricing? No clue.
Guessing the pricing of Apple's products, however, is incredibly difficult. Going into the iPad launch, it was a common guess for the entry-level version of the device to be priced at $1,000. As we know very well today, the entry level pricing for the flagship iPad has been $499 from the beginning -- and remains so today.


iPhone 5c. Image source: Apple.

There was also incredible confusion going into Apple's alleged low-cost iPhone 5c launch. The most common guess for the phone's pricing was around $400. Instead, the phone was priced at a premium-like $549, only $100 less than the flagship 5s.

Apple investors should take studies that try to predict the success of an upcoming Apple product with a truckload of salt -- especially one that only surveys 100 individuals. Piper Jaffray, of course, shouldn't be blamed. No matter how exhaustive a study, predictive power for an entirely new product in a nascent category will be lacking in unforgivable overabundance.

Perhaps this is why Piper Jaffray doesn't see the need to survey thousands of consumers. After all, Steve Jobs has said, "People don't know what they want until you show it to them."

The best indicator we have is Apple's historical record of entering new product categories. The last three major new products in new categories were the iPod, iPad, and iPhone. Does the iWatch have potential to be a success? Absolutely.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour. (That's almost as much as the average American makes in a year!) And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click here to discover more about this industry-leading stock, and join Buffett in his quest for a veritable landslide of profits!

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 don't 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers