Apple's smart watch ambitions for 2013

The year 2012 was another one in which Apple defied market sceptics and delivered another hit, the iPad mini, in the face of stiff competition.

But it wouldn't be a normal Apple year without at least one last rumour to send us scratching our heads into the new year, anxiously wondering what the company has up its sleeve next. The latest speculation isn't necessarily earthshaking, but it is nevertheless surprising: sources based in China claim that Apple is working on releasing a smart watch.

According to a report on China's TGbus.com, the Bluetooth-enabled smart watch will feature a 1.5in touchscreen display and sync directly with the iPhone, running an adapted version of iOS and allowing users to make phone calls and perform other operations from their wrists. First spotted by tech site The Next Web, the watch is supposedly a joint project between Apple and Intel.

This new talk of a smart watch might seem outlandish on its face, but only until you begin to examine some of Apple's recent moves.

Earlier this year, Apple decided to update the iPod nano with a totally new design, one that instantly rendered obsolete a string of iPod nano accessories that essentially turned the device into a kind of smart watch. Kickstarter projects like the TikTok and LunaTik iPod nano watch straps had raised just shy of $1 million (£620,350), proving that a healthy market exists for iPod nano owners who want to partly operate their music device from their wrists.

So months later, when Apple inexplicably changed the design of the iPod nano to a form factor that many agree is something of a step backward, market speculation immediately focused on the notion that Apple might be attempting to displace would-be smart watch competitors, and thus clear the way for its own, forthcoming project - presumably dubbed something like iWatch.

And then there's the eagerly anticipated Pebble smart watch. The upstart company is famously listed as the most successful Kickstarter project ever, raising over $10 million (£6.2m) during its brief fund-raising period.

One other piece of related Apple news to consider is the company's deal with the Swiss Federal Railway. After the launch of iOS 6, the Swiss organisation claimed that Apple had included its watch face design in the updated operating system, thus violating the organisation's trademark. The two parties soon came to an agreement allowing Apple to license the iconic watch face design. Although terms of the agreement were not confirmed by either company, one Swiss news source claimed that Apple paid about $21 million (£13m) for the license.