When you actually think it through, the iWatch is the logical conclusion of the fact that Apple sells the best, and highest margin, personal computers and smart phones. iWatch is really only targeted at iPhone users exclusively, and really only the (profitability) cream of that market.As you noted elsewhere, iWatch will do fine for Apple if it only sells to (the top) 20% of the iPhone market. It is essentially an expensive accessory to the iPhone.
Apple’s owns 92% of smartphone industry’s profits Monday, July 13, 2015“Apple Inc. recorded 92% of the total operating income from the world’s eight top smartphone makers in the first quarter, up from 65% a year earlier, estimates Canaccord Genuity managing director Mike Walkley,” Shira Ovide and Daisuke Wakabayashi report for The Wall Street Journal. “Samsung Electronics Co. took 15%, Canaccord says. Apple and Samsung account for more than 100% of industry profits because other makers broke even or lost money, in Canaccord’s calculations.”
“Events last week highlighted the lopsided financial picture,” Ovide and Wakabayashi report. “Apple is asking suppliers to make a record number of new iPhone models. Meanwhile, Samsung forecast disappointing profits, HTC Corp. reported a quarterly loss, and Microsoft Corp. wrote down 80% of the value of the smartphone business it acquired from Nokia Corp. last year… The results demonstrate the rapidly shifting fortunes in the smartphone business, which Apple transformed with the iPhone in 2007.”
“Apple’s share of profits is remarkable given that it sells less than 20% of smartphones, in terms of unit sales,” Ovide and Wakabayashi report. “Neil Mawston, executive director at market researcher Strategy Analytics, said many Android vendors are stuck between low-cost, high-volume brands such as China’s Xiaomi Corp. and Apple’s premium smartphones.”