Analyst Katy Huberty also notes that Apple's iWatch will perform very well due to the 'halo effect' which initially helped drive iPod customers to the Mac platform. She also says that current smart watch sales should not be used as a predictor for how a product from Apple might fare; rather, investors should look at how Apple successfully managed to sell new product categories to existing customers in the past.
She sees a range of 30 million to 60 million "iWatch" units being sold in the first 12 months of availability. Her models assume an average selling price of $300 and gross margins between 40 percent and 50 percent. She noted that historically, investors have underestimated sales of new Apple product categories based on the limited success of established products. For example, investors originally compared the iPod to the Sony Walkman, the iPhone to BlackBerry, and the iPad to netbooks, she said.
Huberty also notes that loyalty to the iPhone brand has been increasing, improving from 73% in December 2011 to 90% in March 2014. She believes that loyalty will help Apple bring a lot of customers to the iWatch in its first year of sales.
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