While Tim Cook has dropped hints that Apple Inc. (AAPL) is hard at work on a television to drive the next era of growth, the company's wristwatch-style device, still in development, may prove more profitable.
The global watch industry will generate more than $60 billion in sales in 2013, said Citigroup Inc. analyst Oliver Chen. While that's smaller than the pool of revenue that comes from TVs, gross margins on watches are about 60 percent, he said. That's four times bigger than for televisions, according to Anand Srinivasan, a Bloomberg Industries analyst.
Apple, with its iconic brand and lucrative retail network, is poised to tap into the growing watch industry. Headway in the business would help compensate for slowing growth in other areas, such as iPhones and iPods. Apple's stock has slumped by more than a third since peaking in September on signs of accelerating competition led by Samsung Electronics Co. (005930) and concern over how quickly Chief Executive Officer Cook is pushing into new products.