Bloomberg recently wrote a piece on the profit margin of a watch versus a television set. Citygroup analyst Oliver Chen told Bloomberg that the profit margin for watch hardware is about four times bigger than those of television sets, saying the “iWatch” could potentially be a $6 billion opportunity for Apple.
What Chen is forgetting is that Apple’s watch would not simply be a bracelet with some springs and sprockets inside. It would essentially be an iPhone lite on the inside. That would have a serious affect on any profit margin. Advanced computer technology that can fit into a wristwatch is not going to come cheap.
It has been rumored for even longer that Apple has a television set in the works. Rumors of the “iTV” have grown to such proportions that suppliers are claiming they are already building the product, and even the Wall Street Journal reported that the Apple-built television set was in the early stages of testing back in December.
Apple has been trying to calm investor fears lately with the recent plummet in stock prices, which has caused a frenzy. We’ve heard CEO Tim Cook mention upcoming products that will put the company in the spotlight again. However, we don’t know which “next big thing” will hit the market first or how soon.
It is also hard to predict what consumers want at this time. Advanced television technology has already made its way into the living room, but will Apple’s iTV be too much to handle? Will the price point be too high to justify the purchase? Most people go through TVs every couple of years. Apple isn’t going to make an “idiot box” that the average consumer can afford to hand down to their kids after only two or three years.
But, at the same time, can you see yourself walking around with a cell phone on your wrist? I know it shows up in sci-fi movies all of the time, but if the device doesn’t look good and fit perfectly, consumers are probably going to make fun of it and move on. Bluetooth headsets are a perfect example of that. Only a year or two ago, those in-ear devices were all the rage. You couldn’t walk down the street without seeing people talking to themselves with a blinking blue light emanating from the side of their head. We eventually figured out how stupid they look and now you only see a few high-powered executives using them while everyone else moved on to the slightly less ridiculous EarPods.
Which technology would you prefer to spend your money on, a television set that you can’t afford to replace in a couple of years, even if the technology becomes obsolete, or a watch that looks stupid on your wrist and will be replaced with something more fashionable?