Market Overview

Key Smartwatch Trends Every Apple Investor Should Know

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In a new report, analysts at JP Morgan took a look at the smartwatch industry, particularly supply chain names.

A lot has changed in the space in recent months, and the introduction of Apple Inc. (NASDAQ: AAPL)'s new watch will likely completely transform the industry.

Failure To Launch

To this point, smartwatches in the pre-Apple Watch era have seen very limited success.

Analysts point to poor battery life, a lackluster app base and limited functionality as three reasons why consumers haven't warmed up to the current set of smartwatches in a meaningful way.

Analysts believe the newest wave of watches, including the Apple Watch, addresses many of these issues.

Growth Explosion Imminent

Analysts forecast a 40 percent compound annual growth rate (CAGR) in the smartwatch space through 2020. They believe that the global smartwatch market will become a $40 billion industry by that time and watch makers will be shipping more than 180 million watches annually.

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Analysts also project that high-end watches will account for more than 65 percent of the market, suggesting that Apple Watch "will likely dominate the smartwatch market for a while."

Competition With Traditional Watch Makers?

Analysts see little direct competition between smartwatch makers and traditional watch makers.

"We believe smartwatches are inherently CE devices and watchmakers focus more on a blend between style, technology and practical usage since people using conventional wristwatches would find many smartwatch features such as limited battery life [and] notification alerts as unnecessary," analysts explain.

Apple Watch And Apple Watch II (2016) Supply Names

The report contains a breakdown of suppliers for the Apple Watch and anticipated suppliers for the second generation Apple Watch expected out in 2016. Included below is JP Morgan's table of Apple Watch suppliers.

apple_suppliers.jpg

Latest Ratings for AAPL

DateFirmActionFromTo
Mar 2017NomuraMaintainsBuy
Mar 2017NeedhamDowngradesStrong BuyBuy
Mar 2017BernsteinMaintainsOutperformOutperform

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