The iWatch Could Be The First Step In Apple's Plan To Kill The iPhone

Apple is reportedly exploring development of a watch-like product.

Small-minded people will scoff at the idea of Apple building a watch. After all, who needs watches when you have a smartphone. Further, Apple is a company with $200 billion in annual revenue. A $100 watch which will sell in limited quantity is barely going to move the needle.
While all of those are fair points, they're missing a much bigger picture.

There is a line of thinking that the smartphone era will perish almost as quickly as it began.
This is, after all, the natural way of technology. It's defined by creative destruction. Just as the smartphone killed the flip phone, and the iPad is killing the traditional PC, something is going to come along and kill the smartphone.

The early bet on what kills the smartphone is something like Google Glass. Wearable computers are widely believed to be the next computing fad.

For Apple, an iWatch could be a way to test the wearable computer market, says Gene Munster at Piper Jaffray. He says, "We believe that longer term (over the next 10+ years), wearable computers could eventually replace the iPhone and smartphones in general."

He continues, "We believe technology could progress to a point where consumers have a tablet plus wearable computers, like watches or glasses, that enable simple things like voice calls, texting, quick searches, navigation, etc. through voice control."

Much like the current Apple TV is a "hobby" for Apple that lays the groundwork for it to ultimately release a full-blown television, an iWatch could be the "hobby" that lets Apple explore wearable computing.
After all, just because some people think the smartphone will be consumed by wearable computers, doesn't actually make it so. This could give Apple a good testing device.

And, to be clear, we're not saying an iWatch kills the iPhone. We're saying the iWatch could be a peripheral gadget that complements the iPhone. And down the road, the evolution of the iWatch, or other wearable computers, could alter what we currently think of as a smartphone.

If an iWatch is real, it won't come out until 2014 or later, says Munster.

Source: businessinsider.com