iWatch From Apple: Earlier today, we brought you a story about the potential for an Apple Inc. (NASDAQ:AAPL) iWatch to be more profitable than a television. In the story, we shared the following information:
“The gross margins on watches are roughly 60 percent. This is four times more than for televisions. With this in mind, it would only make sense for Apple Inc. (NASDAQ:AAPL) to focus its attention on releasing an iWatch.”
If you believe all the rumors that are circulating, an iWatch is going to hit the market sometime in 2013. Nobody knows if this is definitely going to happen or when it would be released, but there is a lot of information out there.
For example, here is a brief rundown from Business Insider on what the device may offer:
“Features under consideration include letting users make calls, see the identity of incoming callers and check map coordinates, said one of the people, who asked not to be identified because the plans aren’t public. It would also house a pedometer for counting steps and sensors for monitoring health-related data, such as heart rates, this person said.”
While an iWatch is something that will get a lot of people excited, to many, including investors, the more important detail is that it could be super profitable.
To get a better idea of the potential profit margin of the iWatch, Business Insider took the time to break down some stats for a seemingly similar device. Here is what you need to know:
“In 2010, iSuppli estimated Apple’s cost of goods plus manufacturing bill was $45.10 for an iPod Nano. The iPod Nano was the little square iPod with a touch screen. It actually wound up being used as a watch by a lot of people, and perhaps was a preview of an iWatch at Apple.”
“Apple sold the 8 GB iPod Nano for $149 and the 16 GB iPod Nano for $179. It’s always an imperfect science relying on iSuppli for costs since Apple buys in bulk and hammers out special deals. However, using iSuppli as a rough estimate suggests the iPod Nano was super profitable.”
“We don’t know what Apple is planning for the iWatch, but if we use this rough estimate, it’s not hard to imagine the margins on an iWatch being quite healthy.”
While all this sounds great, the article touches on something that investors should be aware of: margin collapse.
Releasing an iWatch would appear to be a great move by Apple Inc. (NASDAQ:AAPL). Share your opinion in the comment section below.
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DISCLOSURE: I have no positions in any stock mentioned.
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