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Analyst: Apple could flog $2.5bn worth of iWatches in one year

If Apple releases a so-called iWatch, as rumours suggest, the tech-savvy timepiece probably won't be a major revenue booster but will show that the Cupertino-based tech giant can still innovate, according to a new analyst report.

Apple could sell between five and 10 million iWatches in its first year on the market, according to a new survey by Piper Jaffray analyst Gene Munster. At this rate, the device could bring in around $2.6 billion (£1.6 billion) in revenue and $790 million (£492 million) in profit.

"While we do not view the watch as a likely needle-mover for Apple in terms of revenue in 2014, we put it in a similar category as the television in that it could demonstrate Apple's ability to innovate ... and potentially lead to a more meaningful new product category in wearable tech," Munster wrote in his report.

The analyst recently asked 799 consumers whether they would buy an Apple iWatch that connected to an iPhone for $350 (£218). Of those with an iPhone, 12 per cent said they would be interested in purchasing the watch while 88 per cent indicated they would not consider buying one.

Just because someone says they are interested in the device doesn't mean they will pay up when actually given the opportunity to purchase it. Taking this into account, Munster "conservatively" estimated that two to four per cent of the global iPhone user base will actually purchase the iWatch in its first year on the market.

The firm estimated a global iPhone user base of roughly 239 million, suggesting first-year watch sales of around five to 10 million units. If Apple was to sell 7.5 million units in the first year (the midpoint of the originally estimated million range) at $350 a pop, the device would yield $2.6 billion in revenue and add $790 million to the company's bottom line. That's only about one per cent of Apple's annual revenue and profit.

During a recent interview at the All Things Digital conference, Apple CEO Tim Cook, who is regularly seen wearing a Nike Fuel bracelet, remained coy when faced with repeated questions regarding a possible Apple wearable computer.

He did concede, however, that wearables are an area "that's ripe for exploration, [and] ripe for us all getting exciting about."

Recently, Apple reportedly hired two Nike execs, fuelling speculation that an iWatch is on the horizon. The firm's main rival Samsung unveiled its take on the smartwatch at IFA last month, but the Galaxy Gear did not fare too well in our review.