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

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.

Are you making these SMSF mistakes?

After four decades advising investors, there are a few common mistakes I've seen SMSF investors make. From holding too much cash and chasing yield to overtrading and trusting tips. Are these errors costing you?

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.

Retirement spending is not one-size-fits-all

New data challenges the idea that Australians are underspending their super. The bigger issue may be helping retirees navigate complexity, make confident decisions and use their savings to support security, wellbeing and choice.

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

The missing link in the CGT debate

A little-noticed consequence of Labor’s tax changes could have implications well beyond investors’ tax bills. The issue raises bigger questions about incentives, capital allocation and the drivers of long-term economic growth.

Latest Updates

Planning

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved. 

Superannuation

How much super should you have?

Average super balances are one of the most misleading benchmarks. They ignore your goals, spending and future needs, creating a false sense of security. Here is how I calculate exactly where I need to be at every decade.

Retirement

Retiring from work is easy, retiring into life is harder

Most people spend decades planning how to retire. Far fewer plan for what comes next. The biggest retirement challenge isn't always financial, and it often catches even the most prepared retirees completely off guard.

Shares

Right asset class, wrong index: the trap in Australian small caps

Most Australian portfolios are concentrated in large caps, with relatively little exposure to smaller companies. But what if the biggest risk isn't the economy, interest rates or valuations? For many, the risk is hidden in plain sight. 

Property

Are these assets the missing piece in Australian portfolios?

Many investors remain concentrated in shares, cash and property. Despite their popularity among institutional investors, real assets remain underrepresented in many SMSF portfolios. Could they be the missing piece?

Investment strategies

The biggest risk that buy-and-hold investors ignore

Investors spend decades learning how to stay invested, yet few have a plan for getting out. When a financial goal has a hard deadline, a worked example shows why a fixed derisking schedule should outrank buy-and-hold discipline.

Investment strategies

How passive investing is driving the decline of active fund alpha

Why have active managers struggled as passive investing has surged? Research suggests that flows into index funds and ETFs are creating structural headwinds, penalising the stock-picking strategies that once generated alpha.  

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 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.