Does is make sense for Apple to release an iWatch?
Not many people wear watches anymore and the iWatch would presumably be a low margin business. Apple has been getting a lot of heat on Wall Street for it’s shrinking margins. Stock is currently up again, but these low margins might be a problem.
But there’s another angle. Apple stock was also getting hit because of iPhone sales growth slowing down. That’s an interesting problem too. Because what can Apple do to improve the iPhone? There are the mandatory screen, speed and camera upgrades. The software can be upgraded, but that doesn’t give the new model a big edge over last years model.
It’s more or less set in stone what a smartphone is: a thin device dominated by a big screen and cameras on both sides. Unless this form factor changes I wouldn’t expect big jumps in smartphones like going from any pre-iPhone smartphone to the iPhone or from the 3GS to the iPhone 4.
But looking at the iWatch as an iPhone accessory could bring big new features to the iPhone. This would justify a lower margin iWatch since it has the potential to drive growth for the high margin iPhone.
An iWatch would instantly add features to the iPhone, that couldn’t be, or wouldn’t be practical, in the iPhone itself. Even if you don’t get the iWatch with your phone there’s always the promise of adding extra features to your phone by getting a watch costing way less than the phone itself.
And the reason many people don’t wear watches anymore is that they don’t have a reason to. I think the iWatch will give them plenty of reasons to wear a watch again, even if telling the time is only a small part of what it can do.