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TheStreet Open House

Apple's iWatch Could Be 2013's Version of Pets.com

Stocks in this article: AAPL VZ

NEW YORK ( TheStreet) -- TheStreet contributor Jason Schwarz nailed it last week in his article, 3 Essential Elements for Apple's (AAPL - Get Report) iWatch Success:

Apple needs to grow this new product category into 20 million units per quarter if it hopes to move the needle.

While I don't agree with the idea of doing a smartwatch, if Apple goes ahead with it, Schwarz covers three areas Tim Cook must nail:

iWatch should do something that iPhone doesn't do.
iWatch should do something that is enhanced by the wrist security.
iWatch should have so much high tech built into it that the product costs $400 or more and is sold with a subsidy.

Short and sweet, but quite complete.

Schwarz speaks my language when he suggests Apple should reinvent your wallet or the combination of your wallet and your pocket. Take the things we keep in these places and blend them into a smart device that makes many of life's everyday tasks easier and more secure.

I fear, at this stage, Schwarz is hoping for too much.

My biggest gripe about the notion of a smartwatch is simply where's the need? The whole over-hyped and forced project of wearable technology seems to be a weak effort from a tech sector that has run out of ideas. At least if you're comparing what lies ahead to the advances of the last five-to-seven years.

Schwarz says an iWatch needs to do something your iPhone doesn't do. Fine, but why not work that functionality into the next generation iPhone? I don't see the perception of better security -- just because you attach a watch to your person -- convincing people to buy another piece of technology that, possibly, duplicates what your iPhone does and maybe, hopefully, a little more.

Schwarz is exactly right. Apple needs to sell tens of millions of iWatches each quarter. If it doesn't, no matter how much critics and Apple fanatics rave over the device, it will go down as a relative failure. And it will drive the stock down. Because it goes a long way to answering the most crucial question facing Apple: Can Tim Cook keep Steve Jobs' magic alive?

While I am 100% on board with Schwarz's conception of a premium-priced device (with carrier subsidy), that puts the cart before the horse. Of course, something like an iWatch could be, for example, an attractive addition to your Verizon (VZ - Get Report) data-sharing plan, but, again, do enough people need or want this in the first place in addition to what they already have?

It would make more sense to enter territory where Apple can really reinvent and disrupt. That's the living room ( Additional thoughts at this link). You don't need to sell tens of millions of $2,000 televisions to move the needle. And you don't need a subsidy either. Couple a television purchase with a free Apple TV set-top box (or build it right in) and/or a free living room-compatible iPhone and iPad and you're good to go. The always-evolving ecosystem lives on.

In any event, I hope you don't read this as criticism or complaining. We're really living through an exciting time in tech, even if underwhelming compared to the disruption we have seen from Apple. The things Apple does next will ultimately set the tone for the remainder of the decade, rendering moves by Samsung and others irrelevant.

Apple can't risk following the crowd and going bust -- even if it's a one-off -- with a Ping or Pets.com-like failure. It needs to lead, extending the trend Steve Jobs put in motion with iPod.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.

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