Provided by Business Insider
Apple's iWatch, which is reportedly coming this year, could kill three birds with one stone for Apple.
- It gives Apple an experimental entry in the wearable computing market which is said to be the next big thing
- If done well it would kill the Apple-can't-innovate-without-Steve Jobs meme
- It could be super profitable.
Let's tackle the third one. Bloomberg, citing a Citigroup report, says the global watch industry will do $60 billion in sales this year, with average gross margins of 60 percent.
Related: Apple's CEO Chose Some Potentially Worrisome Words Yesterday
Apple's iWatch, should it be released, will probably not fit neatly into the watch industry, so these comparisons are probably moot. (The margins on a $54,000 Audemars Piguet watch are probably pretty high, but unrelated to a mini-computer on your wrist.)
However, that doesn't mean we can't take a shot at trying to figure out how much money Apple could make on an iWatch.
In 2010, iSuppli estimated Apple's cost of goods plus manufacturing bill was $45.10 for an iPod Nano. The iPod Nano was the little square iPod with a touch screen. It actually wound up being used as a watch by a lot of people, and perhaps was a preview of an iWatch at Apple.
One of the chief concerns for Apple, from an investors' perspective, is the risk of margin collapse. If Apple could get margin on the iWatch like it did on the iPod Nano it would help the company's overall margins significantly.
Related: Apple's Price Cut On Macs Shows What's Going Wrong at the Company
Compare this to a TV, which many people have been anticipating. As Bloomberg points out, the margin on a TV is much smaller, and the market is much more competitive.
Going with an iWatch could be a more lucrative, innovative move from Apple.
