Let's be honest. Rumors about new or upcoming Apple products would be overpriced at a dime a dozen. Yet speculation grows about an Apple (Nasdaq:AAPL) iWatch. If you think that this is one of those little rumors that somebody dreamed up to make for interesting reading, think again. Some of the more notable Apple rumor mills are reporting its possible existence, and many reputable publishers such as AppleInsider and the New York Times have published iWatch stories.

Computerworld notes that, according to the latest rumors, Apple and Intel are working on a Bluetooth smartwatch, which could be introduced sometime in the first half of 2013. Website 9to5Mac mentions Apple patents that may indicate its interest in the watch. One patent of note integrates features into an iPod Nano-like wristwatch. Other sources point to patents that could be a signal of things to come. Still others explain that the patents could be filed for any number of products or exist to fend off patent trolls. One has to wonder, however, why Apple would take on a project which seems, on the surface, small compared to the TV or cellphone industries.

Killing off the iPhone and Nano
Why a watch? A report from Business Insider suggests that the iWatch may be the future of the iPhone. The article points out that "there is a line of thinking that the smartphone era will end as quickly as it began."

It is all about disruptive innovation, a well-known factor in technology. Apple is not only successful at disrupting competing products; it also disrupts its own. Asymco's Apple analyst, Horace Dediu explains in an article in Macworld that the company "creates new categories and self cannibalizes in a way, the iPhone was about killing the iPod. Apple's number one job today ought to be killing the iPhone."

Then there is the curious de-evolution of the iPod Nano into a credit card-sized device similar to the iPod Touch. It would too large to be wearable, leaving Apple watchers to ask why the company would create such a product. One plausible explanation is that killing off a wearable Nano, making room for the iWatch, was part of the plan all along.

Wearable Computing and Market Growth
Wearable computers are widely believed to be the next fad in computing. For Apple, an iWatch could be a way to test the wearable computer market, said Piper Jaffray's Gene Munster in the Business Insider report. Munster states that "we believe technology could progress to a point where consumers have a tablet plus wearable computers, like watches or glasses that enable simple things like voice calls, texting, quick searches, navigation, etc. through voice control."

Other Companies Are Interested
If Apple is interested in pursuing the iWatch, the company may be a little late to join the party. An article on Cnet mentions a patent application already filed by Google (Nasdaq:GOOG) for a wristwatch. Already past the patent stage and on the market are the Pebble, Nokia and Fossil Bluetooth 4.0 watches, and the Sony SmartWatch that pairs with Android devices. Then there is the Bluetooth voice-controlled Martian Watch that integrates with both the iPhone and Android and was demonstrated at this year's Consumer Electronics Show.

If Apple does end up being fashionably late to the wristwatch party, it wouldn't be anything new. The company wasn't the first to develop a hand-held digital music player or a cellphone, and that worked out just fine for the company. Apple wasn't even the first to develop the computer. Apple clearly doesn't feel the need to be first. In fact, the company seems to do better waiting for others to develop the first generation of a new technology.

The Bottom Line
Whether or not the iWatch is being developed is unclear, but there is no doubt that what seems like a small gadget could lead to a wealth of new products. Much like what happened with mobile phone technology, this could be the next step in a process that makes our phones and the Internet seamlessly integrate with our lives. No more need to hold anything. Could the next step be thinking commands into our devices? Only time will tell.

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