As it stands right now in the wearable-device category, watches are ecosystem dependent. Samsung's watches work with Samsung devices. Apple's watch works with the iOS ecosystem. What happens when a device manufacturer comes up with a thinner product with a longer battery life that is easily connected to any ecosystem at a lower price point? The premium that Apple will charge for their watch will be less acceptable.
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Android watchmakers so far have delivered less than overwhelmingly exciting devices but that won't last forever. At some point, someone in the Android space is going to get it right and will likely price the product at 40 percent less than Apple. Pebble seems to be doing just fine selling a product less rich with features at a discounted price.
Sure, Apple products are often blockbusters (i.e., the iPhone) but occasionally they do have a product that isn't a home run. Apple has sold plenty of mini iPads but it hasn't been Earth-shattering. Apple TV continues to be a work in progress. My concern is that investors are buying into the belief that sales of the Apple Watch will be sustained after the initial launch – and that these expectations are priced into the stock.
As a firm that invests in Apple, our expectations are muted. If this new device is half as popular as the iPad, it will be a huge success. The problem Is that the expectations are so high that anything less than blockbuster will likely be seen as a stumble and investors need to recognize that this sentiment shift is clearly possible.
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Commentary by Michael A. Yoshikami, the CEO and founder of Destination Wealth Management in Walnut Creek, California. He is also a CNBC contributor.
Disclosure: Destination Wealth Management buys Apple for clients. Neither the firm, nor Michael Yoshikami, own any of the other stocks mentioned in this article.