Apple Wins Big in Watch Giveaway

The Apple Watch may not have taken the world by storm the way some investors had hoped when it debuted in 2015. However, 2017 sales estimates suggest the device is steadily gaining traction and a new promotion could give Apple Inc. (Nasdaq: AAPL) a major shot in the arm.

UnitedHealth Group (UNH) announced this week it is adding the Apple Watch to its fitness-tracking rewards program, which is designed to promote an active lifestyle among its customers. UnitedHealth customers can now receive an Apple Watch Series 3 by paying for only the shipping and taxes. The actual cost of the device can then be paid off over time by users earning cash rewards for hitting fitness targets. For example, users can earn $1.25 in credit by reaching 3,000 steps in 30 minutes and another $1.25 by hitting 10,000 steps in a single day.

The new UnitedHealth program comes after Aetna (AET) announced last year that it would be providing free Apple Watches to select employees and customers.

Bank of America analyst Wamsi Mohan says these types of fitness promotions in the health care industry could boost Apple Watch adoption.

“Large national health programs adopting Apple Watch as their fitness tracker could help drive higher sales of the device,” Mohan says.

Bank of America estimates Apple will sell 31 million watches in 2018. The firm predicts Apple Watch revenue will grow 39 percent this year to $12.5 billion. In addition, Mohan says the Apple Watch will be responsible for between 50 cents and 55 cents of earnings per share in 2018.

The device may have taken a back seat to the iPhone X in the minds of Apple investors in the past year, but IDC estimates that the Apple Watch now holds a 21 percent share of the global wearable devices market, nearly 50 percent more than its closest competitor Fitbit (FIT). IDC estimates that Apple Watch’s market share increased 57 percent in the fourth quarter, while Fitbit’s share dropped 17 percent.

“We maintain our Buy on Apple on [its] strong capital return program (including buybacks and dividend increases), opportunities to expand into new end markets to drive growth, and strong expected growth and margins from Services,” Mohan says.