apple-iwatchRumors have flown for years but it seems that in 2014, it is time for the Apple iWatch.

The detail of the iWatch rumors has intensified recently. These rumors offer considerable insight into what Apple (NASDAQ: AAPL) might have up its sleeve.

Almost a year ago I wrote an article predicting that the iWatch could contribute as much as $237 million in just profit in its first quarter after launch. Just days later Apple patent filings were released suggesting that the company is pursuing a curved and continuous display around the wrist.

Here is the latest in the quickly evolving Apple iWatch story.

Morgan Stanley’s Big Prediction About the Apple iWatch

News broke yesterday that Morgan Stanley analyst Katy Huberty is predicting $17.5 billion in iWatch sales after just the first 12 months after launch.

She bases these predictions both on the launch and subsequent performance of Apple’s existing products but also on the number of Apple customers at the time of each launch.

The chart below from Business Insider illustrates her prediction for the launch of the Apple iWatch:

apple-iwatch

The Morgan Stanley analyst predicted $17.5 billion in sales during the first year after launch. If true, the Apple iWatch could contribute as much as $3.97 billion in profit.

When you consider that Apple reported $64.3 billion in profit over the past year, an additional $3.97 billion in profit from the Apple iWatch would be an additional 6% in annual profit.

That could have a huge positive impact on Apple stock.

Will the Apple iWatch Replace my iPhone?

Smartphone users take their phone out an average of 150 times per day. The Business Insider chart below shows the breakdown of why, on average, smartphone users are reaching for their phones.

apple-iwatch

The important takeaway from this chart is most smartphone uses could be replaced by a “wearable.” Wearables, such as Google Glass or Google Contacts, clearly wouldn’t replace a smartphone entirely, but would be a perfect complement to a smartphone.

An Apple iWatch could easily replace the smartphone for initiating messages, voice calls, checking the time, accessing music, using the camera, using the alarm, viewing news & alerts and initiating web searches.

The Apple iWatch isn’t going to replace your iPhone, but it will sync perfectly with your iDevices.

What Will the Apple iWatch Do?

We still don’t know what the iWatch will look like, although a Google (NASDAQ: GOOG) image search for “iWatch concept” yields some pretty cool results.

But we are starting to get insight into what the iWatch will be capable of. Some of the most interesting of the recent iWatch rumors pertain to the people Apple is hiring and new technology the company is patenting.

9to5mac and the New York Times have published stories suggesting that Apple is making a push into health-monitoring and medical devices.

First, the New York Times reported that high-level Apple executives met with officials from the Food and Drug Administration, which is responsible for regulating – among other things – medical devices. The meeting was reportedly to talk about Apple bringing medical devices and apps to market.

The 9to5mac report suggests that the next version of Apple’s operating system, iOS, will include an app called “Healthbook.” The app is reported to be capable of monitoring calories, steps taken and weight lost.

Of course, in order for Healthbook to monitor these things, Apple will need a way to measure them.

Enter the Apple iWatch.

Apple has hired key people from around the medical device industry. Most recently, Apple hired the Chief Medical Officer of the Massimo Corporation. Massimo produces a heart-rate monitor that connects to the iPhone and uses an accompanying app to track and record heart rate data.

Apple is also rumored to be hiring experts in vascular visualization (finding veins, presumably to assist in heart rate and blood pressure monitoring) and non-invasive blood glucose monitoring. The company is also rumored to be hiring fitness experts.

Everything mentioned above suggests that health will play a central role in the Apple iWatch.

Apple iWatch: The Bottom Line

Imagine a device that monitors your heart rate, your blood pressure and your steps, then uses your heart rate data to calculate actual calories burned. This device will also track blood glucose in real time so individuals with diabetes can maintain control of their disease painlessly and conveniently.

Now imagine that this device can take a picture, wake you up, tell you when your next meeting is, display your recent texts or e-mails, and more.

That device is the Apple iWatch.

And after all of the rumors it seems that in 2014 it is finally time for the Apple iWatch.

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Published by Wyatt Investment Research at