1 Thing Holding Smartwatch Sales Back

A killer app is a piece of software that's so attractive that consumers will buy the hardware necessary just to run it. In the early days of personal computing, Visicalc -- the first spreadsheet computer program -- made the Apple II computer attractive for buyers. Later, email was considered a killer app for Internet access.

Apple recently filed a patent for a smartwatch called iTime. Source: U.S. Patent and Trademark Office

Moreover, voice messaging likely has limited appeal. Nobody wants to be that weirdo that's telling his watch to send a message for him. The best use is for people driving or riding a bike, who can't easily use their phone. Why voice messaging is better than placing calls or text messaging is beyond me.

Still, Milunovich has high expectations for the iWatch. He thinks Apple can ship 21 million units in fiscal 2015, which at an ASP of $300 would translate into $6.3 billion in revenue. That would barely move the needle at Apple, which generated $171 billion in revenue during fiscal 2013. Those expecting the iWatch to be a game changer for Apple may want to rethink.

The world awaits

It usually takes some time before software developers catch up with the hardware available. While Apple's closed system puts in the best position to have a killer app at launch, we haven't heard anything that makes me believe that it has that piece of the puzzle yet. As a shareholder, I'd love to be proven wrong.

Meanwhile, smartwatch sales have underwhelmed thus far, with just 500,000 units sold in the U.S. between October and the beginning of June, according to NPD. Until there's a killer app, sales are unlikely to pick up speed. If developers take too long, the smartwatch may suffer the same fate as the netbook.

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The article 1 Thing Holding Smartwatch Sales Back originally appeared on

Adam Levy owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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