Wearable Technology: Apple Inc. (AAPL) vs Google Inc (GOOG)

Investment thesis

In the coming months, Google, Apple and hopefully a number of other companies will be slugging it out in the wearable tech segment.

Google Inc (NASDAQ:GOOG)’s short term plans are more concrete. Glass is already out and could hit the mass market later this year. IMS Research predicts a steep rise in demand for SmartGlass products by year 2016, when the volume could hit 10 million units annually, up from 124,000 units in 2013. By virtue of early entry and product superiority, Google is expected to grab a lion’s share of the pie.

IMS Research predicts the wearable technology market to be worth $6 billion by 2016. With some very rough back-of-the-envelope calculations, I estimate that Google Inc (NASDAQ:GOOG) may be earning $3-4 billion in revenue from its Google Glass and allied products by 2016. This would mean a tidy new revenue stream for the search giant, whose current revenue stands at around $50 billion. Since a stock’s current market price is theoretically the discounted value of its future earnings, I expect the stock to have good upside on account of Google Glass.

Apple Inc. (NASDAQ:AAPL), on the other hand, offers a fuzzier picture. As there is no concrete product announcement, it is difficult to quantify the impact of iWatch on Apple’s revenue and profitability. However, the stock is currently hovering around its 52-week low and the company is barely clinging to its cool factor. Announcing a new cutting edge wearable product will, at the very least, help arrest the fall of Apple stock price.

Jag Mitra has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG).

The article Wearable Technology: Apple versus Google originally appeared on Fool.com.

Jag is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.