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UBS Survey Predicts Big Consumer Appetite in 2015 for Apple Watch

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After taking the temperature of the market for smart watches, UBS expects Apple to move 25 million Apple Watches in 2015 and forecasts annual shipments of the wrist-worn computer will swell to approximately 68 million by 2018.

Because the Apple Watch isn't expected to released until somewhere around the second quarter of 2015, UBS' projections for first year sales are based on the device's first nine months on the market.

Though expectations for the Apple Watch are high, UBS analyst Steven Milunovich stresses the onus that falls on the first generation to encourage a second wave of adoption.

"Apple can't afford to have a poor consumer experience with version one of any product," says Milunovich. "The question is whether the first version will be sufficient to create substantial [consumer] demand."

A lackluster first run of the Apple Watch could see Apple turning its time and energy to other ventures, but the smart watch will enter a market under favorable conditions. Slow adoption and several iterations from Android watchmakers like Motorola and LG has prompted many consumers to wait and see what the Apple watch will bring.

"Just as Apple wasn't the first MP3 or smartphone vendor but redefined those categories, we expect Apple Watch to become first to mind in smartwatches," says Milunovich.

UBS expects the Apple Watch to gross approximately $3.4 billion in profit in 2015 and to eventually bring in over $10 billion annually by 2018. But as was the case with the iPhone usurping the iPod, UBS believes later generations of the Apple Watch could bite deeply into the handsets division.

"With a sophisticated user interface and third-party apps coming on, Apple may be readying for the time when the Apple Watch encroaches on the smartphone market," Mulinovich says.

UBS surveyed 4,000 consumers and 10 percent of the participants indicated it's highly likely they'll purchase a smart watch within the next 12 months. But while UBS predicts a strong future for the Apple Watch, Apple will against find itself battling its fiercest hardware rival.

Samsung, the world's top handset manufacturer by volume, was received well in UBS' study was well. Of the respondents indicating they're considering smart watches, about 37 percent of them are leaning toward the Samsung Gear. 

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