Potential of Apple Watch Dependent On iPhone Market

The first major Apple event this year is just a few days away. There's no denying that Apple's "spring forward" event on 9 March will be about releasing the Apple Watch that was unveiled in limited fashion late last year.

Rumors of production delays and battery life concerns appear to have been addressed, and the class act of Cupertino is now ready for its close-up. Naturally there is going to be some serious buzz whenever Apple enters a new product category, and the tech tastemaker's foray into wearable computing is long overdue.

However, in a problematic development, some reports are starting to surface detailing the stiff price points that these high-tech wristbands will be packing.

Citi analyst Jim Suva put out a note detailing his expectations for the event, including price points of US$ 350, US$ 550, and US$ 950. These are price points that seem closer to the iPad – where Apple sales have been slipping over the past year – than the lower carrier-subsidized iPhone prices.

It isn't really a surprise to see Apple tackle the high end of a market that has been slow in developing. It's a maker of premium products. However, there are a few reasons why Apple could price itself out of the market before it really has a chance to play.

Eyeing the list of Amazon.com's best-selling smartwatches shows items priced at US$ 250 or less, with more than half of the devices available at price points in the double digits. This may seem to pave the way for Apple to plant itself at the high end of the market, but that's a dicey proposition given the cheaper options.

Apple's iPad had a good run for a couple of years before the tablet market was overrun with cheap alternatives. Everyone is already there in the smartwatch space, and that's before Apple has even had a chance to enter the playground. So where will Apple generate the sales?

The tech giant will probably be hoping that the Apple Watch appeals to the growing base of iPhone owners. This is where Apple rocks, accounting for more than two thirds of Apple's sales during the holiday quarter.

There isn't much of a choice here. With iPad and iPod sales falling, this is a company that is all about the iPhone. Revenue in its holiday quarter rose 30 percent, but it would be a 7 percent decline if the iconic smartphones are not included. That should come as a sobering revelation to those that believe simply slapping the Apple name on a product will make it a hit.

The good news here is that the Apple Watch naturally works seamlessly with the iPhone. Citi's Suva sees the features including iPhone notifications, Apple Pay, fitness tracking, and hundreds of apps available by the launch date that it estimates will be April 16. The target market will be huge with Apple selling a record 74.5 million iPhones during the holiday quarter alone. Even if the Apple Watch is tethered exclusively to the iPhone – unlike many operating system-agnostic smartwatches that work with both iOS and Android – it is still tapping a large and expanding market.
The first major Apple event this year is just a few days away. There's no denying that Apple's "spring forward" event on 9 March will be about releasing the Apple Watch that was unveiled in limited fashion late last year.

Rumors of production delays and battery life concerns appear to have been addressed, and the class act of Cupertino is now ready for its close-up. Naturally there is going to be some serious buzz whenever Apple enters a new product category, and the tech tastemaker's foray into wearable computing is long overdue.

However, in a problematic development, some reports are starting to surface detailing the stiff price points that these high-tech wristbands will be packing.

Citi analyst Jim Suva put out a note detailing his expectations for the event, including price points of US$ 350, US$ 550, and US$ 950. These are price points that seem closer to the iPad – where Apple sales have been slipping over the past year – than the lower carrier-subsidized iPhone prices.

It isn't really a surprise to see Apple tackle the high end of a market that has been slow in developing. It's a maker of premium products. However, there are a few reasons why Apple could price itself out of the market before it really has a chance to play.

Eyeing the list of Amazon.com's best-selling smartwatches shows items priced at US$ 250 or less, with more than half of the devices available at price points in the double digits. This may seem to pave the way for Apple to plant itself at the high end of the market, but that's a dicey proposition given the cheaper options.

Apple's iPad had a good run for a couple of years before the tablet market was overrun with cheap alternatives. Everyone is already there in the smartwatch space, and that's before Apple has even had a chance to enter the playground. So where will Apple generate the sales?

The tech giant will probably be hoping that the Apple Watch appeals to the growing base of iPhone owners. This is where Apple rocks, accounting for more than two thirds of Apple's sales during the holiday quarter.

There isn't much of a choice here. With iPad and iPod sales falling, this is a company that is all about the iPhone. Revenue in its holiday quarter rose 30 percent, but it would be a 7 percent decline if the iconic smartphones are not included. That should come as a sobering revelation to those that believe simply slapping the Apple name on a product will make it a hit.

The good news here is that the Apple Watch naturally works seamlessly with the iPhone. Citi's Suva sees the features including iPhone notifications, Apple Pay, fitness tracking, and hundreds of apps available by the launch date that it estimates will be April 16. The target market will be huge with Apple selling a record 74.5 million iPhones during the holiday quarter alone. Even if the Apple Watch is tethered exclusively to the iPhone – unlike many operating system-agnostic smartwatches that work with both iOS and Android – it is still tapping a large and expanding market.