Apple Wristwatch Computer

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SOURCE: http://www.bloomberg.com/news/2013-02-12/apple-said-to-have-team-developing-wristwatch-computer.html

Apple Said to Have Team Developing Wristwatch Computer

By Peter Burrows & Adam Satariano - Feb 13, 2013 12:01 AM ET

Kevork Djansezian/Getty Images

Chief Executive Officer Tim Cook is facing pressure from shareholders who have seen the stock slump more than 30 percent since a September high.

Apple Inc. has a team of about 100 product designers working on a wristwatch-like device that may perform some of the tasks now handled by the iPhone and iPad, two people familiar with the company's plans said.

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Feb. 7 (Bloomberg) -- David Einhorn, president of Greenlight Capital Inc., talks about his call for Apple Inc. to return more of its $137.1 billion in cash to shareholders and his proposal that the company distribute a high-yielding preferred stock that wouldn't cost shareholders. Greenlight, an Apple investor, asked fellow holders to vote against a proposal, outlined in the company's annual proxy statement, that would eliminate preferred stock. Einhorn speaks with Stephanie Ruhle and Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)

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Feb. 8 (Bloomberg) -- Lawrence Haverty, a portfolio manager at Gamco Investors Inc., talks about Apple Inc.'s consideration of ways to disburse some of its $137.1 billion in cash to shareholders. Haverty speaks with Tom Keene and Scarlet Fu on Bloomberg Television's "Surveillance." (Source: Bloomberg)

The team, which has grown in the past year, includes managers, members of the marketing group, and software and hardware engineers who previously worked on the iPhone and iPad, said the people, who asked not to be named because the plans are private. The team's size suggests Apple is beyond the experimentation phase in its development, said the people.

Chief Executive Officer Tim Cook is facing pressure from shareholders who have seen the stock slump more than 30 percent since a September high amid slowing sales growth and competition from rivals such as Samsung Electronics Co. Without a revolutionary new gadget that commands a higher price, investors are concerned about falling margins and increased competition.

"The iWatch will fill a gaping hole in the Apple ecosystem," Bruce Tognazzini, a technology consultant and former Apple employee, wrote in a blog post last week. "Like other breakthrough Apple products, its value will be underestimated at launch, then grow to have a profound impact on our lives and Apple's fortunes."

Natalie Kerris, a spokeswoman for Cupertino, California- based Apple, declined to comment yesterday. Previously, the New York Times reported that Apple was working on a watch-like device.

Wearable Computers

Apple's James Foster, senior director of engineering, and Achim Pantfoerder, another manager, are part of the efforts to introduce a wristwatch-style computer, according to the people. Apple has worked on wearable devices for tracking fitness in the past and never brought them to market, said one of the people.

Creating a watch involves unique challenges, particularly managing power demands so that the battery doesn't need to be recharged every day. Google Inc. has been working on eyeglass- embedded computers and plans to introduce them in 2014.

The introduction of a wearable computing device may signal a new direction for the consumer-electronics industry. Apple's debut of the iPhone in 2007 and iPad in 2010 created the market for touch-screen smartphones and tablet computers that have been followed by companies such as Google, Samsung and Microsoft Corp.

Apple is right to invest in products such as watches, even if they don't result in commercial products, said Josh Spencer, a fund manager at T. Rowe Price Group Inc.

"There's more people that would wear an Apple watch than would wear Google glasses," Spencer said.

Wearable machines for tracking fitness are already on the market from Nike Inc., Fitbit Inc. and other manufacturers.

Hon Hai Precision Industry Co., which assembles the iPhone, in 2001 invested in startup WIMM Labs, which designed a watch with a screen, Wi-Fi and Bluetooth.

To contact the reporters on this story: Peter Burrows in San Francisco at pburrows@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net