What to Expect at the Apple Watch Event

As is often the case, speculation has run wild since Apple (Nasdaq: AAPL) announced it would hold a “media event” next Monday, March 9. Consensus in the investment analyst and nerd community is that the Apple event will mark the debut of the company’s long-awaited Apple Watch.
Apple has certainly hinted in this direction.
Though Apple generally doesn’t explicitly tell us what it plans to announce at its media events, the company typically offers a pretty clear hint via its event announcement. The event was teased with the phrase “spring forward” and the graphic seen below.
Apple Spring Forward Flyer 3.5.15
Certainly “spring forward” suggests a direct tie to time and the Apple Watch. The phrase “spring forward, fall back” is a mnemonic used to help remember which way to change clocks during the start and end of daylight saving time.
Interestingly, daylight saving time begins on Sunday, the day before the Apple media event.
The Apple rumor mill is expecting big things from the Apple Watch. For starters, Apple CEO Tim Cook has said Apple’s objective is to “change the way you live your life.” That’s certainly a bold statement.
Rumors have circulated that Apple is hiring medical device experts from across the industry, suggesting that Apple is intending to make its Apple Watch into the ultimate health monitoring device. With its Apple HealthKit pulling health data from pedometers and other health-related apps, health monitoring is already becoming a reality even without new hardware from Apple.
That said, there still is no single device useful for monitoring heart rate, blood pressure, steps, calories burned, blood glucose, etc. Such a device could even alert users or medical professionals to sudden medical events such as strokes, seizures and heart attacks.
This represents a perfect opportunity for Apple to disrupt a fragmented industry with one seamless and comprehensive piece of wearable technology.
While I’m fully expecting the Apple Watch to eventually change the way Apple users monitor and track their health, I don’t expect all of this from the first version. That said, this first version of the Apple Watch is expected to contain some health tracking – heart rate, pedometer, HealthKit aggregation and dashboard – plus seamless Apple Pay integration and more.
Let’s take a quick and conservative look at the numbers.
Apple has said its Apple Watch will go on sale starting at $349. Though there are expected to be several price levels, let’s conservatively assume that all of the Apple Watches sold will generate $349 in revenue.
Analysts at Strategy Analytics are expecting Apple to capture a little under 55% of the market for smartwatches in 2015, selling 15.4 million Apple Watches. This would mean $5.37 billion in new revenue.
With Apple’s latest gross margin of 39.9%, the Apple Watch could contribute $2.14 billion in new income during 2015.
Apple generated $39.5 billion in net income during 2014. The Apple Watch could boost this figure by as much as 5% during just its first year of production. This is even more impressive considering that the Apple Watch won’t even go on sale until April.
The Apple event on Monday could be about much more than just the Apple Watch.
Though it seems certain we’ll learn key details about the Apple Watch, Apple is also overdue for updating its popular MacBooks and its Apple TV pet project. It may also release a new iOS software update to make its devices compatible with the Apple Watch.
Either way, the Apple event on Monday is sure to be one for the ages. We may very well see a broad refreshing of Apple’s product line. Plus, it’s Apple – you just never know what the company might throw in at the end.
At the very least, we’ll see the launch of the Apple Watch, a product Apple expects will “change the way you live your life.”
Disclosure: Jay Taylor currently owns shares of Apple (Nasdaq: AAPL).

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