Apple's iWatch May Need FDA Approval -- and That's a Good Thing

NEW YORK (TheStreet) -- Not a day goes by where there isn't another iWatch rumor. Investors and customers alike are eagerly awaiting the iWatch. So why is Apple taking so long to release its iWatch?

We've heard the term "time is money." For Apple (AAPL), time may be worth upwards of $50 billion in the first few years of iWatch sales.

Both Reuters and the Wall Street Journal believe Apple can sell between 50 and 60 million units. According to these reports, the iWatch, which is expected to come in various sizes, may be priced in a range from $300 to as high at $1,000.

Eva Dou and Lorraine Luk of the WSJ explain:

"Apple aims to address an overarching criticism of existing smartwatches that they don't provide functions significantly different from that of a smartphone."

Dou and Luk are referring to (among others) Samsung's (SSNLF) Gear line of smartwatches. Samsung has sold roughly 2 million of the devices last year. Of that total, 1.2 million were based on the Google's (GOOG) Android operating system. Other smartwatch makers include Sony (SNE) and Pebble.

The market is just beginning to bloom, however. According to the research firm IDC, the wearable industry will explode to 112 million devices in the next four years -- even though only 6 million units were sold in 2013. That's an annual growth rate of 450% over the next four years. 

But wearables have been a tough nut to crack.

Apple CEO Tim Cook once said that for Apple to disrupt the wearable market, the product has to be a "must-have" and not merely a "want." And this is why, according to Apple Toolbox, Apple has met with the Food and Drug Administration to asses the iWatch's "must-have" capabilities.

To separate the iWatch from the rest of the crowd, Apple is focusing not just on the device's electronic and technical capabilities. Apple wants the iWatch to emerge as an actual medical and health device.

To that end, Apple's announcement about its HealthKit at its Worldwide Developer Conference earlier this month hinted at the iWatch's potential health-monitoring sensors. It will will allow wearers to track oxygen saturation, calorie consumption, weight and sleep activity among other metrics.

Reports also suggest that the iWatch may offer a non-invasive way to check blood-sugar levels with the use of a glucometer. In other words, the device may be able to tell a wearer his or her glucose level without a needle or drawing blood. And that's where Apple's ambitions cross the jurisdiction of the FDA.

That's huge.

Under the Freedom of Information Act, Apple Toolbox requested and received a response from the FDA, which affirms that Apple officials met with the FDA last December to discuss mobile health.

Apple wanted to know how the FDA would regulate the use of the glucometer. According to the FDA's response to Apple Toolbox:

"The glucometer may be unregulated if the intent is for a user to follow their blood sugar for the purposes of better nutrition. If the glucometer is marketed for diabetics, however, it would more likely be regulated as a medical device."

The question, though, is whether Apple can operate on the FDA's timetable.

The FDA is not going care about the importance of, say, the holiday quarter. Nor will they care about Apple's product cycle.

The good news, though, is that the FDA is involved early, which means that Apple won't be caught by surprise if and when the company's products require regulation.

This is yet another example of how Apple plans to disrupt the wearables market. And with 112 billion devices projected to be sold in the next four years, Apple wants to get this right.

Unlike existing smartwatches that were rushed and are seen as merely add-ons, Apple is taking its time with the iWatch. And time will be money for its shareholders.

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At the time of publication, the author was long AAPL.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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