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Expert: Why Apple Watch Will Be Apple's Most Upgradeable Product

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Expert: Why Apple Watch Will Be Apple's Most Upgradeable Product

It might be difficult for investors to imagine a world where consumers line up at the nearest Apple Inc. (NASDAQ: AAPL) retail outlet for an upgrade instead of an entirely new product. Believe it or not, that could be the future for at least one new Apple device.

"I think most of the improvements will occur in the internal guts of the watch," Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga. "Effectively, a watch is a watch. Apple can literally upgrade a few key components inside."

Udall said that the processor and the battery will need to be included in that upgrade.

"They could upgrade [users] a couple times for a reasonable cost so you might get far, far more life [out of the Apple Watch] than the current consensus [anticipates]," he said. "I think the upgrades are going to occur on the inside of the watch, not the outside. If you buy Apple Watch, it might be a very long-lasting product."

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'Compelling Purchase'

If Apple allows customers to upgrade their watches, Udall believes this will make for a "much more compelling purchase."

"I'm pretty sure you're going to be able to take your watch into the Apple Store, give it to them, and they'll be able to upgrade internal components," he said.

There are still a number of questions surrounding this concept, which has yet to be announced by Apple. For starters, how long will it take for Apple to upgrade each smartwatch? Will the company have enough staff on hand to perform the upgrades in each store, or will it be forced to ship out some (or all) of the devices?

Customers will also be eager to know how much Apple might charge for an upgrade. Udall isn't sure yet, but he's looking at the long-term benefits, not the near-term questions.

"I think it's going to have a much longer-lasting shelf life than the typical Apple product," he said. "I think as that starts coming out, that could mean a huge sales difference three, four quarters out."

Udall remains conservative on first year sales estimates. He expects Apple to sell 15 million watches within the first 12 months of its availability. He said that sales could jump to 30 million units during the second year.

And while the cheapest Apple Watch will sell for $349, Udall expects the average selling price to come in at $600 (including accessories). He expects most Apple Watch customers to take home at least one additional band.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Posted-In: Apple Apple Watch Sean UdallAnalyst Color Exclusives Tech Best of Benzinga

 

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