SAN FRANCISCO (MarketWatch) – For a product that so far has no price tag, no confirmed release date and is still awaiting federal authorization before it can go on sale, the Apple Watch is already considered by many to be redefining the nascent smartwatch market.
Apple Watch is already considered by many to be redefining the nascent Smartwatch market.
And Apple’s AAPL, -0.38% decision to get into the smartwatch sector is enough to make consumers consider buying a smartwatch of any kind, according to research from UBS analyst Steven Milunovich.
On Monday, Milunovich said that a UBS study based on 4,000 respondents showed that 10% of those surveyed said they were “very likely” to buy a smartwatch over the next 12 months. Milunovich also said that about two-thirds of those who said they were likely to buy a smartwatch would be making the purchase in addition to, rather than in place of, a traditional watch.
The worldwide smartwatch market is relatively small, and generated $700 million on sales of just 3.1 million such timepieces in 2013, according to Milunovich, who included FitBands with displays as part of the sales figures.
The top-selling smartwatch last year was the Galaxy Gear from Samsung, with 800,000 units sold and a 34% market share.
Milunovich reiterated that he estimates Apple will sell 24 million Apple Watches during the first nine months that the devices are on sale, a figure that is based on the possibility that 10% of current iPhone owners will buy one of the new gadgets. Apple Watch owners will also need an iPhone 5 or later phone in order to access all of the Apple Watch’s capabilities.
“Apple can’t afford to have a poor consumer experience with version one of any product,” Milunovich said. “The question is whether the first version will be sufficient to create substantial [consumer] demand.”
Milunovich, who has a buy rating and $125-a-share price target on Apple’s stock, estimates that the average selling price of the Apple Watch will be about $420 per device, and that Apple could grow sales of the Apple Watch to almost 68 million units by 2018.