Can Apple really sell $17 billion worth of smartwatches?

By Chris Umiastowski on 4 Feb 2014 05:01 pm

This week Katy Huberty, the Morgan Stanley analyst covering Apple, made a prediction that Apple could sell up to $17.5 billion of its hotly anticipated smart watch in the year of its launch.  The basis behind this expectation is a $299 price point and the assumption that most customers who buy it will consider it an accessory for an existing Apple product, at least according to another story on this topic over at CNET.

Obviously these calculations are based entirely on rumors. We don’t know when or if Apple will release an iWatch, but it seems logical that if they do it will have some unique capabilities to make it worth owning, and it will sit at the higher end of the price curve relative to other smart watch devices.

But can Apple really sell a watch for $299? I have to admit that sounds very pricey to me. A watch clearly doesn’t have a screen that is large enough to use for any real content consumption, so I think when people think about what they can get value-wise out of a $299 watch versus … say a $299 iPad Mini, it’s a tough sell.

Yet, if Morgan Stanley is at all close to the mark, Apple will supposedly sell on the order of 58 million watches in the first 12 months. For comparison purposes, Apple sold 51 million iPhones in the holiday quarter that just ended.

Also, if this revenue prediction is true, it means about a 9% boost to Apple’s top line, which is absolutely meaningful.  Who wouldn’t jump at a product category that grows the business that much in a single shot and causes (likely) more platform lock-in with customers?

I admit that I’m not a watch guy. I don’t wear one ever. I stopped wearing a watch when I started carrying a smartphone everywhere I went.  If you’re anything like me in terms of smartphone use, you look at the screen several times per hour already and a watch serves no new purpose. So for Apple to succeed in this space it’s not about replacing the watch.  It’s got to be about making a wearable gadget that brings some important and new value to people’s lives.  I’m sure we all have our thoughts on what these values could be, but I’d love to hear your thoughts in the comments area.  

Can Apple really justify $299 for a watch?  What would it have to do (seriously)?

Reader comments

Can Apple really sell $17 billion worth of smartwatches?


If they can sell there phones for the high price that the do and still sell millions, I'm sure I sheep will line up to pay $300-$600 for and iwatch

Posted via the Android Smartwatch Fans App!

Isn't the retail price of the Galaxy Gear $299? I'm not into Apple enough to buy their watch, and I use a Pebble with my Android, but $299 for an Apple watch wouldn't be surprising. Apple sells the most expensive tablets and phones and we know how well they sell.

Posted via the Android Smartwatch Fans App!

"If you’re anything like me in terms of smartphone use, you look at the screen several times per hour already and a watch serves no new purpose"

I was like you but now I don't have to take my smartphone out several times per hour to see the screen........I just look at my watch. :-)

Posted via the Android Smartwatch Fans App!

Yea they'll price it like your putting a down payment on a country club house.

Nexus 5...enough said

"Introducing the iWatch. It goes on your wrist. It's made by Apple."

That's about all they need to say to sell it at $299. Easy money.

I say they won't sell as well unless their is some unique innovation. 299 is a hefty price and even Samsung fans didn't jump all over the gear.

When it comes to tablets apple has a leg up so I see how he people could up the money. And when it comes to the phones well of course they sell. The majority of them are through a contract. Now an I watch that doesn't wow? It will sell but not as predicted. The it's is worth the investment. The watch? We shall see.

Posted via the Android Smartwatch Fans App!

I don't know $299 seems a bit low to me, especially from Apple. I'm sure they will pack a lot of stuff into it and make it "high quality". Look at the Pebble Steel for $249 which is high quality but somewhat basic functionality and I think the Samsung gear went for $350-400 at launch. I think watches in general are more of a functional fashion accessory so I wouldn't consider it a competitor to the iPad mini.

In my opinion, Galaxy Gear (which I see as basically an over-glorified, slightly more sophisticated Pebble) is only worth $50-$100 USD. If the iWatch is that simple, I won't buy it. If, however, it's the iFuelBand smartwatch like the rumor that's circulating, I'll buy it. It could probably fetch $100-$200 max.

Yes they can because too many Apple users are blinded by their technology per dollar ratio...Virus or not, i'm not spending thousands when i can spend hundreds

Enough of the name calling already. If a person chooses to use and purchase Apple products over another doesn't mean anything except they just like the products Apple makes. I have used several different cell/smartphones over the years and ALL have their pros and cons.......nuff said. iWatch will sell and a lot of them...PERIOD