NEW PRODUCT: APPLE I WATCH Purpose of Product Development Process: “ to improve the effectiveness of people engaged in developing and managing new products -This mission includes facilitating the generation of new information, helping convert this information into knowledge which is in a usable format, and making this new knowledge broadly available to those who might benefit from it” (1).

The i-Watch:  Is only compatible with Apple.  Recalls all passwords, eliminating the need to enter the passwords on various devices.  Can act as a TV Remote  Identify/find mobile devices.  Can give direction while travelling.  Includes health monitors and fitness tracking sensors.  Can display who is calling, without the need to grab the phone  Display a preview of i-Phone camera on Watch display – which can be used to capture images.

 Parametric Cost Estimates : Use of cost estimating relationships and relevant mathematical algorithms.  Neural Networks: Cost analysis of historical data.  Function Costing: Product cost from specification of its performance.  Activity-Based Costing : Using experts reasoning to estimate costs.  Generative Costing : Cost is estimated by adding the processes involved in product development.  Target Costing: This requires setting a target cost by subtracting a desired profit margin from market price.

 Three primary impacts on pricing decisions are: 1.Customers 2.Competitors 3.Costs  long-run pricing decision are based on: 1. Market-based pricing : what customer want? Reaction of competitors? What price to charge? 2. Cost-based pricing : What is cost of producing? Therefore what price to charge to cover cost and achieve targeted return.

 Based on market based pricing Apple inc can base it I watch pricing on:  Target Costing: It will allow Apple inc to attain the targeted operating income per unit.  Activity-based costing: It will help managers to determine accurate costs of product in order to set prices.  It will also aid managers in cost management manage by reducing or changing various activities and assess their impact on costs.

The growth of Phones and tablets have dropped significantly, since: Smartphone sales are expected to grow by around 19%, as compared to 39% growth in Tablet growth is expected to be 19.4% this year, as compared to growth of 51% in Majority portion this growth arrives through emerging markets, while the selling prices and margins are decreasing. Since Apple Inc. creates more than 50% of its revenue from the I Phone sales the development and execution of smart watch can mitigate the threat it is facing in the tablet and PC. The I Watch is therefore a product which has the potential to adopt the iPhone effect.