Apple Watch will become ‘Apple’s most profitable product’

The Apple Watch could become Apple’s most profitable product line, at least according to one analyst.

Carl Howe, a data consultant for Think Big Analytics, claims the huge Apple Watch margins mean big profit for the US electronics firm.

“My belief is that the Apple Watch product line will become Apple’s most profitable product line ever, with gross margins exceeding 60 per cent,” explained Howe.

He continued: “I’ve built a simple model that predicts that the initial run of watches was more than 3 million units and will yield Apple Watch revenues of over $2 billion for the first two weeks of sales.”

It’s important to note that Howe doesn’t mean the Apple Watch will bring in more money than the iPhone 6 and 6 Plus. Instead, he claims the profit margins will be better, which in turns means less risk for Apple.

That’s largely down to the fact that wearables – particularly luxury ones – don’t play by the same rules as general consumer electronics.

Related: Apple Watch vs Android Wear

Apple is toeing the line between technology and jewellery, which means it can pump up the R.R.P in ways that are impossible with the iPhone.

“The core electronics modules in the expensive models are the same ones used in the Sport models, and they just don’t cost that much,” said Howe, detailing how the impressive margins are achieved.

“While adding gold cases and designer bands add cost to the bill of materials, the costs are small compared to the price premiums paid for these products.”

He added: “Unlike in the consumer electronics business, I see no pressure for prices to fall and if anything manufacturing costs will, resulting in a very profitable business.”

The Apple Watch was made available for pre-order on April 10, with sales estimated to outstrip the lifetime figures for the entire Android Wear platform.

The cheapest Apple Watch Sport available to buy in the UK is £299, while the priciest Apple Watch Edition will set you back a whopping £13,500.

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