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.

Related Articles
  1. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  2. Economics

    Explaining Market Penetration

    Market penetration is the measure of how much a good or service is being used within a total potential market.
  3. Economics

    Calculating the Marginal Rate of Substitution

    The marginal rate of substitution determines how much of one good a consumer will give up to obtain extra units of another good.
  4. Investing

    The European Effect on Google's Bottom Line

    The EU is turning up the heat on Google. What effect will it have on the company's bottom line?
  5. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  6. Stock Analysis

    The 6 Worst Technology Stocks of 2015

    Learn about the technology sector and how it has performed in 2015. Understand the six worst performing technology stocks by average return in 2015.
  7. Entrepreneurship

    Top 5 Startups That Emerged in Denver

    Learn why Denver is one of the hottest markets in America for startups, and identify five of the top startups that are emerging from the Denver market.
  8. Entrepreneurship

    Top 5 Startups That Emerged in Raleigh

    Learn about the startup scene in the Research Triangle hub of Raleigh, North Carolina. Discover which startups are the hottest to emerge from this tech city.
  9. Entrepreneurship

    Top 7 Startups That Emerged in Mexico City

    Learn why Mexico City has the potential to emerge as a major player in the startup scene, and identify several companies leading the way.
  10. Economics

    How Do Asset Bubbles Cause Recessions?

    Understand how asset bubbles often lead to deep, protracted recessions. Read about historical examples of recessions preceded by asset bubbles.
RELATED TERMS
  1. Duty Free

    Goods that international travelers can purchase without paying ...
  2. Google Blogger

    Google Blogger is a free publishing platform run by Google (GOOGL). ...
  3. Wordpress (CMS)

    Wordpress is widely considered easy to use and is the CMS of ...
  4. Content Farm

    Content farming has been likened to the “fast food” of the internet ...
  5. Contactless Payment

    Contactless payment is a secure method for consumers to purchase ...
  6. Information Management Technology ...

    Information management technology is the distribution, organization ...
RELATED FAQS
  1. What is the long-term outlook of the electronics sector?

    While the electronics sector can expect moderate growth in the short- to mid-term, led by steady demand from emerging markets, ... Read Full Answer >>
  2. What companies will be hurt the most by Apple's latest product plans?

    As of 2015, Apple's latest product plans pose a challenge to rivals across several industries. These competitors include ... Read Full Answer >>
  3. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  4. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  5. What role does the OEM (original equipment manufacturer) play in the finished product?

    Original equipment manufacturers (OEMs) do not typically play much of direct role in determining the finished product. However, ... Read Full Answer >>
  6. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!