Apple Watch's design is its 'killer feature' -- analyst

The Apple Watch's killer feature is actually its overall design and not any specific functionality, according to Piper Jaffray analyst Gene Munster.

In an investors note released Monday following the Apple Watch event, Munster said that investors may have missed the device's killer feature. (Apple's shares closed relatively flat at the end of the day). Instead of any one specific function, he said, the watch's leading feature is its design, while the actual technology is secondary. That's because the watch competes not against other smartwatches but rather against traditional watches, Munster said.

The Apple Watch is packed with a host of technical features and content, such as apps, notifications, Apple Pay support and the Siri voice-activated personal assistant. Apple is selling three variations, including a high-end Watch Edition with an 18-karat gold case that starts at $10,000. As such, Apple clearly created at least its most expensive watch with an eye toward competing not in the technology sector but in the luxury jewelry sector.

"We believe the biggest question heading into the Apple Watch event was, 'Aside from the watch being made by Apple, why will consumers want to buy it?' We think the killer feature is not actually any of the technical features, but rather the design of the watch," Munster said. "Apple is trying to reinvent how people think about watches in general, not smartwatches. As such, we believe the design of the watch and the Apple brand are the two biggest selling points and the technical features are a value add vs. a standard watch."

Munster is not alone in his assessment. Last week, the Apple Watch won a coveted design award in the 2015 iF Design Awards, which lauded the device for its "revolutionary new technologies, a pioneering interface and a design that honors the rich tradition of watchmaking."

Piper Jaffray analyst Erinn Murphy offers a different take than Munster. The Apple Watch doesn't quite offer the fashion or status found in traditional luxury watches, she said in an investors note. However, she said, "the overall watch category is suffering from fatigue and as such, the Apple Watch is the 'new and shiny' gadget from a company notorious for being disruptive in new categories."

Despite his enthusiasm, Munster predicts that the Apple Watch will take time to catch on with consumers. The analyst stands by his initial forecast of 8 million in unit sales in 2015 that will generate about $4.4 billion in revenue -- or about 2 percent of Munster's prediction for Apple's overall revenue. His unit sales figure is considerably lower than the 14 million forecast by other Wall Street analysts and the 10 million to 20 million expected by "most investors," according to Munster's note.

So how long will it take for the Apple Watch to rev up revenue?

Munster said he believes it could take up to a year and a half for the watch to generate real consumer interest as more of the devices start to appear in public, especially because Apple's wearable is a brand-new category. By comparison, the iPod took around three years to achieve a significant surge in consumer demand, while the iPhone and iPad each took around a year and a half, according to the analyst.

As such, the watch's "breakout quarter" will be at the end of 2016 when sales for the holiday quarter alone could hit 5 million. Gazing into 2017, Munster's crystal ball sees total Apple Watch sales for the year of 40 million to 50 million units, generating around 10 percent of the company's full-year revenue.

"We believe 40-50 million units by [calendar year 2017] would be a success for the watch," Munster said. "We note the 40-50 million units in CY17 would mean 8-10 percent of the iPhone user base would purchase an Apple Watch, which is essentially in-line with prior surveys we have done in terms of iPhone owner interest in the Apple Watch."