Analyst Sees iWatch in Apple’s Future

Rumors that Apple is developing a wearable computer in the form of a wristwatch surfaced in the last few days of 2012, and Piper Jaffray analyst Gene Munster thinks those reports have legs. In fact, he sees wearable computers as a big part of Apple's future, and ultimately as a replacement for the iPhone.

Apple iWatch? Gene Munster says "yes."

"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," Mr. Munster said. "Longer term, screens in glasses or projectors could replace the necessity of a screen from a smartphone or tablet. These devices are likely to be cheaper than an iPhone and could ultimately be Apple's best answer to addressing emerging markets."

Reports of rumored watch came from sources in the supply chain claiming Intel developed the watch and that Apple has been very interested in it. Other than it's alleged 1.5-inch OLED display with indium tin oxide-coated glass, no other details are available.

That, however, looks to be enough for Mr. Munster, although he doesn't see Apple releasing its wristwatch soon. "While we are unsure of the ultimate launch timing (likely 2014 or later), we believe that Apple will eventually introduce some type of wearable computing product. As we have previously noted, we believe that wearable computers will ultimately be a major future trend," he said.

Assuming Apple does plan to release a watch-size computer, it would give the company a new product for the consumer market and potentially generate a new revenue stream outside of the Mac and iPhone/iPad area. Mr. Munster also sees it as a potential revenue generator should Apple decide to sell connectivity licenses to third party manufacturers wanting to make accessories.

Apple doesn't talk about unannounced products, so there won't be any confirmation coming out of Cupertino. That said, it's more than likely Apple's engineers are working on wearable devices, but that doesn't guarantee any will ever make it to store shelves.

For now, wearable computer fans will just have to wait and see -- as will Mr. Munster.

Apple is currently trading at $549.18, up 17.01 (3.20%).