Every week it seems like we have another new rumor from “sources familiar with Apple’s plans” claiming that the company is getting ready to launch a watch of one sort or another. At the same time, we continue to hear rumors that Apple is looking to get into the TV market with its own Apple HDTV. One analyst believes that Apple will probably get into the watch market before the TV market.
The analyst is Oliver Chen from Citigroup and after looking at the numbers, he believes the iWatch could be a $6 billion business for Apple. The analyst also noted that there is “plenty of opportunity for upside” assuming Apple is able to create something totally new as it did with the iPod. Chen bases his numbers off the fact that the global watch market is worth $60 billion a year.
Apple will have to capture 10% of that global watch market to hit that $6 billion number Chen thinks is doable. I would think Apple certainly has the ability to do that with an iWatch. The product would likely capture a number of people that wouldn’t have been in the watch market otherwise helping to grow the market overall.
Chen also notes that watch margins are humongous along the lines of 60% making the potential margins on the iWatch very appealing. Using these figures Chen came up with the potential gross profit of $3.6 billion for Apple if it enters the watch market with an appealing product. At the same time, if Apple entered the TV market and captured 10% it would expect a gross profit of about $1.79 billion making the watch market much more appealing.