Praise for the Apple Watch - but it's the iPhones that will bring in the big money!


By Noel Young, Correspondent

September 10, 2014 | 4 min read

It had been hailed as the biggest event at Apple since Steve Jobs launched the original talking Macintosh 30 years ago. So how did yesterday’s debut event in Cupertino measure up?

The Apple Watch: Great .... but

Most of the talk was about the Apple Watch , the first new device launched by the company since the iPad four years ago.

But the company’s home town paper the Mercury News declared that the company's immediate future and the Apple Watch's success depended on the other gadgets introduced on Tuesday -- new iPhones

The main focus was the Apple Watch, a smartwatch that will work in concert with the iPhone as long as the device is an iPhone 5 or newer. The device has a starting price of $350 and early reviews proclaiming it the best smartwatch so far, said the Mercury News.

“However, Apple will have to sell a lot of smartwatches to realise a substantial amount of revenues, and it won't be helped by the Christmas shopping season since the watch will not hit shelves until 2015.”

Morgan Stanley analyst Katy Huberty's predicted that Apple would sell up to 60 million smartwatches in the first year -- adding more than 10 percent to Apple's revenue total.

But that’s a very tall order, said the paper. Bloomberg News points out that only 2.8 million smartwatches were sold in 2013, along with 13.6 million fitness-tracking devices.

"If you believe in having a screen on your wrist, then this is the way to do it, but the question is whether this is something people want," Andreessen Horowitz partner Benedict Evans told Bloomberg.

Apple's big moneymaker is still the iPhone, which makes up the majority of Apple sales and profits. Apple introduced two larger iPhones on Tuesday, the iPhone 6 and iPhone 6 Plus, with the latter phone of the "phablet" variety, offering a 5.5 inch screen between the typical dimensions of smartphones and tablets.

The larger screen is an important feature for Apple's growth in Asia, where the phablet form factor has been extremely popular.

"That's a slam dunk," TECHnalysis Research analyst Bob O'Donnell told Mercury News reporter Julia Love. "Most of the people things are doing with their phones today really cry out for a larger screen."

Along with the iPhone 6 and iPhone 6 Plus, Apple will continue to sell the iPhone 5S and 5C at reduced prices

In return, iPhone adoption could lead to greater uptake of the new offerings Apple introduced at the big launch..

"The iPhone acts as a critical bridgehead to acquire new customers, and as a foundation for new ventures such as Apple Watch and Apple Pay," IHS analyst Ian Fogg was quoted as saying.

"The more new customers Apple can win with the iPhone 6, the greater the chance of success the company will have with Apple Watch and Apple Pay."

Apple's stock topped $103 in intraday trading but ended with a 0.4 percent decline at $97.99.


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