iWatch would be more profitable to Apple than television set, report says

Estimates show that Apple could generate more profit from a smart watch than the rumoured iTV

New estimates have indicated that Apple could make more profit from its rumoured iWatch than it would from an Apple television set.

Citigroup analyst Oliver Chen estimates that the global watch industry will generate more than $60 billion in sales this year, with gross margins at about 60 per cent, reports Bloomberg.

While the TV industry brings in more revenue, gross margins on watches are about four times bigger than for televisions, adds Bloomberg Industries analyst Anand Srinivasan.

Chen believes that the iWatch "can be a $6 billion opportunity for Apple, with plenty of opportunity for upside if they create something totally new like they did with the iPod - something consumers didn't even know they needed."

SEE: Apple iWatch release date, rumours and leaked images

Bloomberg notes that market-research firm HIS Electronics & Media forecasts that the TV industry will generate $119 billion in sales in 2013. So, taking Chen's margin estimates and the industry sales forecasts leads to the prediction that a 10 per cent share for Apple in each market would mean a gross profit of $3.6 billion for watches, high above the $1.79 billion the company would make from televisions.

SEE: Apple Television iTV release date, rumours and pictures

Rumours of an Apple smart watch, dubbed iWatch, have been hotting up in recent months, with Apple CEO Tim Cook recently revealing that the company is exploring new product categories.

Several newly published Apple patent applications have added evidence to the growing pile, with one describing a wearable computer with a flexible display that can snap around the wrist to become a smart watch.

Bloomberg's report this week reiterates its claim last month that Apple has a team of 100 people working on a smart watch. The Wall Street Journal and New York Times both also suggested that Apple is working on a watch-like wearable device with some smartphone capabilities, as the company looks to new product categories for future growth.

In its new report, Bloomberg cites an anonymous source who said: "Features under consideration include letting users make calls, see the identity of incoming callers and check map coordinates."

An iWatch could help boost Apple shares, which have been falling after concerns about iPhone 5 sales and lack of innovation from the company. But Cook has insisted that Apple has some "great stuff coming."

SEE: Steve Wozniak: 'Apple is losing its cool, but I'd welcome an iWatch'

NPD Group analyst Marshal Cohen said: "Apple can merge fashion with function. An Apple watch could triple the size of the watch business in a year or two. They have the opportunity to get everyone that owns a cell phone to go out an buy another watch."

Talk of an Apple television dates back as far as 2009, with Piper Jaffray analyst Gene Munster still insisting that Apple will launch the product, dubbed 'iTV, this year.

Other reports have suggested that Apple is instead planning to improve its Apple TV set-top box to bring more advanced features to the £99 device.

See also:

Which was Apple ticks on the iWatch will show how gutsy the firm remains

Apple iWatch to lead 500m wearable computer rush

Can a 'nifty' iWatch from Apple catch on?

Three year wait for Apple's iWatch?

One third of consumers interested in buying an Apple iWatch, survey finds

Three ways to imagine an Apple 'iWatch'

Apple's iWatch doesn't scare smart watch makers Pebble, MetaWatch

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Ashleigh Allsopp

Macworld U.K.
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