Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 101

Why the Apple watch is disruptive

A lot has been said about all the fun things the Apple watch can do for you (show you the gain on your stock portfolio, let you know when your Uber car is close) and very little on the information you provide to it, like reading your vital signs and suggesting a movie or retail therapy when your biometric data says you are low. It’s this trove of highly personalised data which has Apple and the app development community salivating: remember, you don’t have to buy the internet (ie it’s ‘free’) because it’s the internet which is selling you. And think about how Facebook started as a personal communication tool, but is now very highly-prized as an advertising platform.

Apple has said that it won’t sell your data, and that is true, to a point. Apple doesn’t sell data on you, or your friends, family, location etc. But platforms like Google, when accessed on their devices, do.

Apps include more data about you

Few people have ever really turned their minds to the question of why so many companies push their apps rather than just their web experience, but the reason is that when the app is chosen, it just about always includes much more data about you than just the web version. You can confirm this is the case by reading the terms and conditions (you knew there was a reason you should read these, right?)

Which brings us back to the biometric data. It’s early, obviously, to be making accurate predictions of what the Apple Watch means, disruption-wise, but the hard-heads in Apple have already made available the system developer kit to app designers so they can work out how to milk your biometric data.

And just like Instagram, Facebook, Google and the like, the real commercial value of the Apple watch will be in the new types of data which it makes available. What sort of data? How excited or tired you are (through the heart rate monitor), and how active you are. How would this be useful? Very active people could get a discount on their health insurance, with insurance companies using it as a marketing tool to pick up new customers.

Or how about this? Excitement levels during movies and television shows. What makes you sweat, and your heart race, and when do you feel sad during a movie or television programme. Who wants this? Well, obviously movie and television programme producers. The in-built microphone on the watch knows (through media recognition app Shazam) what programme you are watching, and when (replay, live etc), and your reactions to it. Or how about medical device companies which want to monitor your sleep patterns to provide better quality, more expensive sleep apnoea masks which work with the data the watch provides. And how about the medical research groups which require large scale, prolonged data to assess particular aspects of health?

The point is not to try and work out the different iterations of the applications themselves. Significant resources will almost certainly be devoted to this, with Apple helping to drive the process. The point is that the watch, strapped as it is to your skin, makes available a slew of data on you that has never really been available before. And it’s this data which is likely to form part of the next wave of disruption.

Of course, to the consumer, it will just be a sexy new gadget, with functionality including a pay-wave through Apple Pay, talk and text, a buzz function to get you along to the next meeting, and all the rest of the interesting, convenient and fun stuff. And that’s half the point. It has to be a must-have device in the first place to become meaningful in the installed-base sense, at which point it can become a mass marketing tool like a biometric version of Google or Facebook. And then the disruption starts.

The market will judge its success

What’s it worth on the Apple stock price? The average predicted sales from Wall Street analysts is 23.25 million Apple watches sold. At around US$1000 each (there are gold watches being sold too) that works out at $23.3 billion in sales. Assuming a gross margin of 40%, this would be pre-tax earnings of US$9.3 billion, which at the company’s multiple of 9.9x (yes, it's less than Telstra, as we noted here) works out at US$92 billion, or US$15.80 per share – this is the value already built in to the stock price. If the watch fails, the Apple stock price will fall by at least that much. And the stock won’t really move if there is a perception that 23 million units is the correct number for first year sales. But if it is ahead of that, the stock will pop, with each 23 million units worth an incremental US$15.80 per share. A little over 10% a share. And that could get your heart racing …

 

Alex Pollak is CEO of Loftus Peak, a fund manager that specialises in listed global portfolios for SMSFs. Disclosure: The author and Loftus Peak clients own Apple shares. This article is general information and does not consider the personal circumstances of any investor.

 

  •   20 March 2015
  • 1
  •      
  •   

RELATED ARTICLES

CBA, AUSTRAC and our Orwellian privacy laws

Three main challenges to online ads and ‘surveillance capitalism’

banner

Most viewed in recent weeks

Testamentary trusts post-budget: Estate planning, tax reform and the ‘death tax’ debate

Proposed Budget changes to taxation are casting new uncertainty over testamentary trusts, prompting closer scrutiny of estate planning structures and the real implications of reforms still taking shape.

High quality businesses are on sale

Beneath the dominance of the ASX's largest stocks, much of the market has been left behind. High-quality companies are now trading at levels rarely seen, offering opportunities for investors willing to look deeper.

Meg on SMSFs: The CGT changes don’t impact super but what about Div 296 tax decisions?

New CGT rules could tip the scales in the super vs non-super debate. For those facing the Division 296 tax, the case for withdrawing has gotten more complex. A "comparison rate" tool may help assess decisions.

The strange effect of the 30% minimum capital gains tax

The 30% minimum tax on capital gains sits at the heart of the budget's proposed reforms. Yet the mechanics reveal anomalies that introduce unexpected distortions that raise questions about its design.

Ranking three common retirement strategies

The defining challenge of retirement isn't just about building wealth, it's about converting your lifetime savings into sustainable income. A holistic understanding of different strategies can improve long-term outcomes.

Welcome to Firstlinks Edition 667 with weekend update

The downfall of the giant and three lessons for investors.

  • 18 June 2026

Latest Updates

Planning

Does your will qualify for the discretionary testamentary trust exemption?

Treasury has confirmed the exemption many families were hoping for. But buried in the fine print are two conditions that could leave some wills on the wrong side of the exemption, despite years of careful planning.

Lithium's latest drop and what it means for ASX investors

Lithium's latest sell-off has punished ASX miners as prices remain hostage to shifting expectations. The key challenge is navigating a market prone to extreme volatility despite a strong case for the long-term demand outlook.

Investment strategies

CGT reform and fund turnover: who really feels the impact?

The implications of CGT reform are far and wide. As the 50% discount gives way to inflation indexation, turnover and return profiles may become critical drivers of after-tax performance. Some strategies face a far greater hit.

Superannuation

Super was built for a very different Australia

Our retirement system was built around assumptions that no longer hold. Lower homeownership, longer lifespans and changing expectations are exposing cracks that policymakers and super funds need to address.

Retirement

Retirement in reality - 4 months in

Many people spend years planning financially for retirement but little time preparing for what comes next. Four months in, here are the surprising lessons I've learnt on finding purpose, social connection and healthy habits.

Investment strategies

After the Budget, Australia needs its own definition of quality

As tax reforms reshape investment incentives, investors should rethink what quality investing means in the uniquely concentrated Australian market, where traditional frameworks may not translate as effectively.

Datacenters are the new shale oil

Why are tech giants pouring billions into datacentres when the economics look questionable? The most dangerous words in investing may be: "everyone else is doing it". Today's AI boom has striking parallels with the shale bust.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.