Apple Inc. (NASDAQ:AAPL)’s iWatch – an innovation that might not generate much revenue

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There is no doubt about Apple’s ability to introduce state-of-the-art innovative devices; however its innovation does not always guarantee huge profits. A testament to this fact is a survey conducted by the senior analyst Gene Munster of Piper Jaffaray. The survey shows that Apple Inc. (NASDAQ:AAPL) will be able to sell around 10 millions of its iWatches in its first year.

The survey consisted of 799 consumers in the US, only 12% of which said they would buy the $350 iWatch whereas the rest did not show interest in purchasing the item.

The survey reveals that US iPhone owner citizens are not all that excited about the iWatch despite its ability to connect to their iPhone. While those who already use iPhone in the rest of the world are also reluctant to spend money on yet another expensive Apple device. So the survey concluded that around 2 – 4% of the total iPhone users around the world might purchase iWatch in its first year.

According to the estimated sales of iWatch of 5 to 10 million units, Munster believes that if Apple can sell around 7.5 million units at $350 then these sales will increase Apple’s revenue for 2014 by $2.6 billion and gross profits by $790 million. This financial impact is not that impressive as it contributes to only 1% of Apple’s total annual profit and revenue.

Wall Street believes that even though iWatch might not get Apple the profits it desires, but it will certainly speak volumes for its ability to innovate and produce remarkable devices.

Despite all this speculation, Apple Inc. (NASDAQ:AAPL) has not said much about its smart watch’s launch. The only clue is Tim Cook, Apple’s CEO’s interest in wearable technological devices for wrist, which he expressed at the D11 Conference.

Munster said that iWatch is not being perceived as a revenue generator; it will only uphold the company’s reputation as the leader in innovative devices.

The midday action on Monday reflected an upward trend in Apple shares by 1.7% ($491.27).

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