Analyst: iWatch May be More Profitable Than iTV

Rumors of Apple's much needed iWatch still insist that the wearable gadget will launch this year. Given that the company hasn't introduced anything new since the original iPad, it's not surprising that Apple is pushing for a 2013 release. Let's also not forget that Microsoft just launched the touch-friendly Windows 8 and Windows RT – followed by a string of form factors -- and is set to unload the Xbox Infinity on gamers, cranking up the Cupertino, California heat.

That said, 2013 is about to become a nasty war for the consumer dollar: Microsoft vs. Sony, Microsoft vs. Apple, Sony vs. Apple, Google vs. Apple and Google vs. Samsung. For the consoles, it's not just about gaming anymore, but about pulling consumers away from their tablets and smartphones while providing similar short-n-sweet experiences. Nintendo? It's lost in its own little Mii-infested world, refusing to fully move on from decades past.

So what does the iWatch have to do with gaming? It doesn't really, at least, not that we know of. It's Apple's means of staying in the gadget spotlight in 2013, a device to tide Apple fans over until iTV finally lands in living rooms to really give Microsoft and Sony a hard time. Bloomberg reports that the rumored iWatch will be more profitable than the TV project because gross margins on watches are about 60-percent, four times the margins for televisions.

"This can be a $6 billion opportunity for Apple, with plenty of opportunity for upside if they create something totally new like they did with the iPod -- something consumers didn’t even know they needed,” said Citigroup Inc. analyst Oliver Chen.

According to Chen, the global watch industry will generate more than $60 billion in sales in 2013 whereas the TV sector will generate $119 billion. Yet if Apple enters both markets with a 10-percent share, it will generate a gross profit of $3.6 billion for watches and a $1.79 billion for TVs. That said, it's understandable why Apple would push an iWatch first – it may even serve as a TV remote and motion detector for iTV.

Bloomberg reports that Apple has a team of 100 employees, led by lead designer Jonathan "Jony" Ive, working on the wearable device. Features may include handling calls, checking map coordinates, identifying incoming calls, counting steps using a built-in pedometer, monitoring health-related data and more. Apple has filed at least 79 patent applications, and is shooting for a fall 2013 reveal, likely alongside the new iPod Touch and iPhone generation.

Additional reports indicate that yes, the iWatch will use a full-blown version of iOS. Remember that sixth-generation iPod Nano that you could wear as a watch? That didn't use iOS, but a separate mobile OS that resembled Apple's iPod Touch platform. Using a modified iOS this time around means the device will be able to interact with other iOS devices like the iPhone and iPad. But as TechCrunch points out, the only drawback is that iOS for iWatch could add "one more degree" of fragmentation to Apple's OS.

Unfortunately, the company is reportedly having issues with the battery, only receiving a couple of days on a single charge rather than the targeted four to five for a public release. There's also talk that Apple still needs to work on proper pathways between the iWatch to the iPhone for transmitting information and notifications (which may help with the battery).

If Apple can't get the battery issues under control, the company may delay the gadget until 2014. Yet given all the hardware hitting the market from rivals, Apple is likely hell-bent on a 2013 release so that stockholders can sleep peacefully at night knowing the company is still "innovative."

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