Apple Inc. is setting their eyes on their next endeavor, and they believe that their new “iWatch” can be their hit product. The Apple iWatch will be a complementary product to the iPhone, and it will connect to the phone, allowing users to check their text messages, access email and applications, and check whether directly from the watch. The watch will also have a heart rate monitor and many other features. Although many other companies in this industry have either stayed away from e-watch design or have simply ignored them, Apple believes that they can be pioneers in the industry.
I can’t tell you for sure that the iWatch will be the next big thing. However, I can tell you that Apple will have many successful sales.
The wrist watch industry is a huge industry that is projected to have over $60 billion dollars in sales by the end of 2013. The average gross margin that a company in this industry receives from a quality watch averages around 60%. Company’s that sell watches well can make a large amount of profit in a small amount of time.
In the past, plans for SmartWatches created by companies such as Microsoft have fallen through. Many consumers chose to use cell phones or traditional watches. However, as mobile apps are becoming more of a common place in everyday life, consumers require more devices that will let them manage and control this information. Apple is in a good position to become a “pioneer” in the SmartWatch industry, and succeed where many other companies have failed. This endeavor could make up for Apple’s slowing growth in their iPod and iPhone product lines.
Apple’s faithful consumer base is extremely brand loyal, and many of these consumers live and breathe Apple products. These fans will buy Apple products no matter what they are, simply because they carry the Apple brand. In 2012, 55 million homes in the United States owned an average of 1.6 Apple products, and at least a fourth of these consumers will make one or more purchase within the next year. Apple consumers who own the iPhone are the most brand loyal and most likely to purchase more Apple products (the Telegraph). Furthermore, 84% of consumers who own iPhones will make another iPhone purchases, while only 48% of Android users would purchase another Android phone. With the iWatch’s functionality with the iPhone, many of these brand loyal consumers who own iPhones will want to own the iWatch. If 8% of users who own iPhones purchase an Apple watch priced at $250, Apple can make 5.7 billion dollars in sales (Forbes).
These sales goals are very obtainable if one considers the demand consumers have for an iWatch. In a recent survey, 38% of respondents said that they would definitely purchase an iWatch, 26% expressed interest in owning an Apple iWatch, and 36% said that they were undecided (E-week). The survey also stated that these consumers would be more likely to purchase if the iWatch if it had GPS, wi-fi capabilities, text and email, and weather and map integration. This survey proves that there is a demand for an iWatch, specifically one made by Apple, but they also need to remember to include the features that the consumer is demanding.
Apple will have a major competitive advantage if they release their iWatch relatively soon. However, if their Apple’s iWatch is successful, many other competitors will follow suit. The KickStarter funded Pebble Watch has already been developed, and many backers are already receiving their watches. This watch has similar features and works on both Android phones and i Phone. Furthermore, Samsung is already planning a rival to the iWatch. Apple may have the initial advantage of being the pioneer in the market, but they will need to make sure that they stay ahead of their competitors.
In conclusion, if Apple wants their iWatch to be successful they need to ensure that they meet needs of their core consumers. One of Apple’s core competencies is their ability to create innovative designs and aesthetically pleasing technology. If Apple continues to apply this competency to their new iWatch, there is no doubt that the watch will sell. Apple already has a large consumer base that is demanding a SmartWatch. They just need to make sure that the product falls in line with the value proposition that Apple products are known for.
Do you think Apple’s iWatch will be succesful? Leave a comment below.