Apple Inc. (NASDAQ:AAPL) is working on plans to incorporate electrocardiogram (EKG) capability into its Apple Watch. The company’s smartwatch already has a heart monitor and has since it launched. So why the fuss over the possibility of an Apple Watch EKG?
The short answer: incorporating the more advanced technology would greatly boost the device’s appeal for monitoring health. The resulting Apple Watch sales could be enough to move the AAPL stock needle, potentially in a big way.
Report: An Apple Watch EKG Is In The Works
Bloomberg reported yesterday that Apple is working on supplementing the current Apple Watch heart monitor with an EKG monitor. Medical professionals use EKGs to help predict an increased risk for serious issues like stroke or heart failure.
In the prototype currently being tested by Apple, customers would use the electrocardiogram by squeezing the frame of the Apple Watch with the hand not wearing the smartwatch. Doing so results in a trickle current of electricity passing across the wearer’s chest. Through this, the Apple Watch EKG can track the heart’s electrical signals, detecting abnormalities.
Can Apple Pull It Off?
EKG technology is not rocket science. In fact, there is already a third party Apple Watch band called KardiaBand from AliveCor, Inc. that incorporates an EKG. It’s been cleared for use by the FDA and goes for $199.
Apple should have no trouble incorporating the sensor, but the company is likely focusing on details like accuracy, ease of use, component cost, potential impact on battery life and space requirements.
Once those issues are addressed, the elephant in the room is FDA approval.
An Apple Watch EKG monitor would push Apple’s smartwatch into the realm of being a medical device. So each generation of Apple Watch going forward would require FDA approval. And although the FDA announced a fast-track program for these sorts of medical devices last year, approval is still another hoop to jump through. A hoop KardiaBand doesn’t need to worry about. Apple Watch bands have followed the same standard since the original. And since its EKG-equipped band was already approved, KardiaBand doesn’t need to be re-certified with every new Apple Watch release.
Becoming A Medical Device Opens Up a Huge New Market For Apple Watch
If an Apple Watch EKG means required FDA approval before a new Apple Watch can be released, why bother? After all, the existing heart rate monitor is pretty good.
It’s the same reason why Apple has been pursuing a blood glucose monitor for the Apple Watch: the potential market for the smartwatch explodes.
When the Apple Watch was first released, it was predicted to be the next big thing for the company, a new “hot new product” that might eventually supplant the iPhone as the force behind AAPL stock growth. It didn’t turn out that way, as the smartwatch market proved smaller than expected. But so far a pivot in focus toward health and fitness has paid off with increased Apple Watch sales.
An Apple Watch EKG takes the smartwatch even further down that path and taps into a vast, rapidly growing market for digital health monitoring devices. Worth $19.8 billion in 2016, it’s predicted to hit $254 billion by 2024.
The Bottom Line For AAPL Stock
Apple doesn’t spike out Apple Watch sales, but in September, Apple Watch revenue since launch was estimated at $12 billion. That’s over two and a half years. As a medical device, the Apple Watch would not only tap into the massive digital health monitoring device market, it has the potential to be covered by health insurance, making personal affordability less of an issue.
Put in that context, an Apple Watch EKG has considerable upside for Apple revenue and AAPL stock. It would also put Apple Watch’s biggest rival at a disadvantage. Fitbit Inc (NYSE:FIT) has been fighting to stay competitive with the Apple Watch as consumers move away from basic fitness trackers. So far, Apple’s pace of new features — including LTE on the Apple Watch series 3 — has been difficult for FitBit to keep up with. An EKG feature would only widen the gap.
An Apple Watch EKG may mean additional red tape to clear between releases. But it would open up a massive new market for the company that could result in Apple Watch sales living up to the promise of becoming a significant factor in AAPL stock growth.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
