Apple (AAPL) investors, who are patiently waiting for the iWatch to become a reality, should take note that AT&T (T) will start selling the LG Electronics (LG) G Watch on July 11. Google's (GOOG) (GOOGL) wearable-specific Android Wear OS powers the LG G Watch. It will be important for investors if AT&T can sell the G Watch as easily as it sells iPhones to its post-paid subscribers.
AT&T, which benefits a lot from selling the iPhone, might be able to push down the G Watch to its existing Android phone subscribers. Furthermore, bundling the G Watch with the new LG G2 and G3 Android premium phones should be attractive to new subscribers.
AT&T's willingness to help sell smartwatches is more important than the news that Apple poached a Swiss watch sales director from Tag Heuer. AT&T's marketing muscle has proven itself with the early years of the iPhone.
Once the iWatch arrives, I expect Apple to tap AT&T again to help it distribute its first smartwatch product. An iPhone 6/iWatch bundle offer from AT&T is attractive.
AT&T's Role in Apple's Success
AT&T, no doubt, was crucial to the success of Apple's phone business. The late Steve Jobs failed at first to convince AT&T to support the iPhone. The initial rejection did not deter Jobs because he believed that AT&T should be his partner for the iPhone.
As early as 2005, Jobs was already trying to find a wireless provider to help launch the iPhone. He needed a wholesale mobile virtual network operator (MVNO) that will give him favorable terms and flexible access on the iPhone's voice and data management. AT&T management was cool to the idea of giving control to Apple. Wireless carriers traditionally hold absolute control on the phones they sell to their subscribers.
However, Jobs was undeterred and eventually recruited AT&T's support in 2006. Jobs also managed to persuade AT&T to share revenue with Apple. In return, AT&T got a 3-year exclusive contract for the iPhone and the first iOS handset launched in June 2007.
AT&T helped Apple post giant gains over the last 7 years. The iPhone now generates more than 57% of Apple's revenue and most of the company's net income.
Source: Morningstar.com
Apple is hiring Swiss luxury watch employees for a reason. The iWatch, like the iPhone, might come in as a luxury smartwatch to set it apart from Android Wear products.
The same Snapdragon 400 chip that is found inside mid-priced Android phones of today powers the LG G Watch. I do not think Apple will stoop down and start making mid-priced smart devices any time soon.
Dirk (on the watch)