Apple Inc. Moves 1 Step Closer to an iWatch

According to a new CNBC report, Apple (NASDAQ: AAPL  ) has hired a senior sales director away from the luxury brand company TAG Heuer to work on the upcoming iWatch. The move could give Apple some credibility in the high-end watch market, and give the device an edge over Samsung's (NASDAQOTH: SSNLF  ) smartwatch.

Apple's hiring strategy
The CNBC report said Apple hired a top executive away from Tag Heuer, which makes luxury Swiss watches and other high-end goods, and 9 to 5 Mac is reporting that the hire is Patrick Pruniaux, the former vice president of sales and retail at the company.

That's a strategic hire for Apple considering a possible iWatch will need to both appeal to the high-end market and be a device people will want to wear everyday.

One of the biggest criticisms of smartwatches put out by Samsung so far has been that they are too big and bulky for everyday use, and that they don't offer much value on top of a smartphone.

That's where Pruniaux comes in. He has more than a decade of experience with the LVMH luxury brand under TAG Heuer, and his global sales and retail experience could give Apple the strategy it needs to sell its iWatches. Apple needs more than just a screen on consumer's wrists, and Pruniaux knows how to sell devices that people want to wear everyday.

The hire feels similar to Apple grabbing Burberry Chief Executive Officer Angela Ahrendts to head up the company's retail and online stores. With the Ahrendts and Pruniaux, Apple obviously wants to take the high-end approach to its smartwatch -- like it's always done with its products.

Foolish takeaway
At what price point an iWatch will come in at is still unknown. Plenty of analysts have chimed in with predictions, most between $250 and $350. But KGI Securities analyst, Ming Chi Kuo thinks the device will be sold at several different prices. 

In an investor note back in April he said,

"Fashion is the name of the game; most expensive model likely priced at several thousand US dollars. Referring to the rules of the fashion market, we predict the iWatch casing and band will come in various materials. The most expensive model of the iWatch line will carry a price tag of several thousand US dollars."

I think even Apple would have a very difficult time selling a $1,000 watch, so I'm doubtful a price that high would be a great strategy. Selling several different watches with higher- and lower-end specs and materials could pay off though. The wearables market is still too new to know exactly what consumers are willing to pay for and spreading out the options could help ease people into the market.

Analysts are predicting anywhere from 5 million to 58 million in first-year unit sales for the iWatch -- clearly a huge range. This would equal between $1.75 billion to $17 billion in iWatch revenue if the watch is priced between $250 and $350. With Apple's latest hire, it's clear the company wants to place its new wearable tech in the high-end market, but I don't think we'll see a four-digit price tag anytime soon.

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  • Report this Comment On July 07, 2014, at 3:52 PM, mcsandberg wrote:

    If Apple manages to pull off a curved, flexible sheet of glass with minimal opaque areas for battery and circuitry, I'll gladly shell out serious $$ for it.

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