Buyers Cautious on Purchase of Apple Inc. (NASDAQ:AAPL)’s iWatch

IPhone 6 is arguably the gadget of the year having propelled Apple Inc. (NASDAQ:AAPL)’s stock to an all-time high in terms of valuation. As attention shifts to the much-publicized iWatch, a survey carried out by Piper Jaffray research firm indicate that people remain cautious on whether they will purchase the gadget, awaiting for more information.

Declining Demand

Gene Munster, an analyst at the firm, has already stated that 7% of the current iPhone owners will be willing to buy the iWatch with the remaining resorting to a ‘wait and see approach.’ The number is down by 1% compared to the 8% that was floated when iPhone 6 was launched in September. Most of the skepticism on the device has to do with the fact that it will be the first Apple Inc. (NASDAQ:AAPL)’s product in the wearable space, awaiting to see if it will be a hit.

Munster however remains hopeful that the demand for iWatch will skyrocket nearing its release date especially on Apple Inc. (NASDAQ:AAPL) releasing more details, pertaining to specs and capabilities. The release of the wearable has been rumored to be sometime in the second quarter of next year. Sales estimates for the gadget currently stands at 10 million units should it be unveiled before June.

Gross Margins

Gross margins and overall sales of the iWatch are poised to be between 50-60% based on the fact there is no sufficient information on the gadgets pricing, as well as the costs of the parts. Reports suggest that margins for the aluminum-clad Apple Watch should be between 30-40% with the Luxury Apple watch crafted with 18 karat worth of karats and should command margins of close to 60%.

The analyst believes that at an average sales price of $500 with sales of 10 million units, Apple Inc. (NASDAQ:AAPL) should be able to recoup up to 2% of its annual revenue from the sale of the watch. The Cupertino-based company has already stated that the gadget could go on sale for $350 but with no details on higher tier iterations.