While some analysts point to modest sales of existing smartwatches as evidence that the iWatch is likely to be a relatively minor new category for Apple, Huberty believes that they are using the wrong measure.
It’s that loyalty and the so-called “halo effect,” Huberty writes, not the current watch market, that will drive sales of the unannounced product that she (like everybody else) is calling the iWatch …
Huberty says that her ‘base case’ – the most likely outcome – is that the iWatch matches the first year sales growth of the iPhone. That would see it sell 30 million units in the first 12 months, generating an estimated $9B in additional revenue for Apple. If another noted analyst is correct, those 12 months are likely to begin sometime in November.
Her ‘bull case’ – the most optimistic of the realistic possibilities – is to match the early growth of the iPad, which would double sales to 60M units in the first year. In that case, she says Apple’s stock could climb as high as $132 (equivalent to $924 pre-split).
Huberty does also have a ‘bear case’, where iPhone sales level off and the iWatch fails to take off.
The reality, of course, is that no-one knows. Analysts are attempting to predict the sales of a device whose design is uncertain and feature set unknown. It should also be noted that Huberty has, in the past, predicted even greater things for the iWatch.
But Huberty’s argument is not an unreasonable one: if one had attempted to predict iPhone sales based on the smartphones on the market prior to its launch, that too would have been predicted to be of only moderate appeal. With more than 200 million people part of the Apple ecosystem, a focus on both fitness and fashion, and marketing expertise pulled in from TAG Heuer, the Apple Effect may be substantial.