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Apple to launch Apple Watch, but will it take off?
00:00, 06 March 2015
Since the launch of the iPhone 6 in September last year, Apple's share price has risen nearly 30%, while the number of handsets sold has continued to break records, after a bit of a slowdown just prior to the iPhone 6's launch, as consumers held back in anticipation of the new product release. In its Q1 results announced at the end of January, the company sold a record 74.5m iPhones while the App Store also recorded a stellar performance. Revenues for the first quarter came in at $74.6bn, over double the number of handsets sold in Q3 2014, while profits came in at $18bn. Margins also showed improvement as the iPhone continued to sweep away its nearest opposition, overtaking Samsung earlier this month as the biggest global smart phone seller, for the first time since 2011. Samsung has hit back in this particular battle announcing the launch of its new Galaxy S6 phone, earlier this month. Having set the bar so high Apple's ability to innovate is likely to continue to be challenged over the course of the next few months, starting on Monday as it looks to announce the launch of its eagerly awaited Apple Watch product, which is expected to go on sale in April. Speculation has continued about how many types of the watch will be made available, from an entry level model, to a very expensive luxury edition model. The biggest problem Apple is likely to have is the cost structure, particularly at the upper end where luxury timepieces tend to be more bespoke and branded. For example why would someone sport an Apple watch in preference to a Rolex, or other luxury brand wrist watch? That being said the top end of the market is not likely to be where Apple makes its money, but in the mid-tier section or the "Sport" version, where prices are likely to be set at similar levels to an iPhone, and while Apple aficionados are likely to be first in line, the fact remains it is still a watch, and most people like their watches to tell the time, and not much else. We already know that the watch will need recharging on a daily basis, and while that's more or less an accepted convention for a phone, do I really want to charge my watch on a daily basis as well, particularly as my phone tells the time anyway? Apple Watch fans will point to the number of new health apps that are likely to be made available as a result of this launch, but a lot of these apps could well be available on the iPhone as well, and quite honestly I don't really want my watch telling me that I have to get up and walk around, when I've been sat at my desk more than an hour. Don't get me wrong, like a lot of people I'm a big Apple fan, but I already have a wrist watch, as well as a Blackberry, and an iPad, all of which I use every day, and the last thing I need is an extra device that runs out of charge at an inopportune moment. If I'm honest the time line of the next iPad release is of more interest, in terms of whether we get a bigger screen, a faster chipset, and a better battery life, along with the probability that we the addition of USB ports. This is more likely to make me more productive than an expensive wrist trinket. In short, Apple has a lot of convincing to do to get this fan on board, with the idea of a watch. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.