) recently filed for a trademark for "iWatch" in Japan. According
to Bloomberg, Apple has sought protection for the name, which
represents a new product category of either a handheld computer
or a watch.
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The trademark filing further corroborates earlier rumors of Apple
working on a wearable computing device. The device is similar to
a wrist-watch and can handle some of the functions performed by
an iPhone or iPad.
Wrist-wearable computing devices are looked upon as the next step
of innovation in the high-end consumer electronics market. At All
Things D's D11 conference in May, Apple's CEO Tim Cook said that
these products could be an interesting market going forward.
Apple's closest competitors in the smartphone hardware and
software market, Samsung and
), are keen on developing a similar kind of device. In March this
year, Samsung confirmed that it is developing a wristwatch, which
will have the capabilities of a smartphone.
Another major consumer electronics manufacturer,
launched its much anticipated SmartWatch in 2012. The wristwatch
wirelessly connects with Google's Android-based smartphones. Sony
recently unveiled SmartWatch 2, which supports near filed
communication (NFC) technology.
Apple has not launched a new product since Oct 2012, while its
last innovation dates back to Apr 2010 (iPad). On the other hand,
Samsung continues to frequently update its entire product
portfolio, which has increased its penetration across all
segments of buyers (both high income and low income level) over
the last one year.
In such a scenario, we believe that Apple really needs to produce
something innovative such as an iWatch that could support its
share price (down 25.5% year-to-date).
Although Apple revealed limited details about the product
(including product specifications and probable launch date),
Apple's move to trademark the name confirms its participation in
the race against Samsung. This may provide some upside to the
share price in the near term.
Additionally, Apple's recently announced entry into the
Internet-radio market is worth mentioning. Although the company
faces significant competition from
), Apple's loyal customer base and licensing deals with leading
music labels give it a significant competitive edge in our view.
Currently, Apple has a Zacks Rank #3 (Hold).