The internet is buzzing with rumours that Apple is secretly developing a wearable computer called the 'iWatch'.

Bruce Tognazzini, a former designer at Apple, wrote on his Ask Tog blog: "The iWatch will fill a gaping hole in the Apple ecosystem. It will facilitate and coordinate not only the activities of all the other computers and devices we use, but a wide array of devices to come.

"Like other breakthrough Apple products, its value will be underestimated at launch, and then grow to have a profound impact on our lives and Apple's fortunes."

The iWatch could link to an iPhone via Bluetooth - and there are reports that a prototype is currently being worked on at Apple research labs.

With no new innovative product since the iPad in 2010, industry analysts believe that Apple needs to come up with a revolutionary piece of kit as a new source of revenue.

The market is poised for "wearable computing", according to Jupiter Research. Last November, the company forecast that the technology could be worth up to £1 billion - if embraced by fitness fanatics, the military and healthcare workers.

The iWatch doesn't need to be recharged, says Tognazzini, as Apple can utilise its patent on a wireless recharging method. It will also be controlled by Siri, a voice-driven assistant, so there's no need for excess buttons to scroll through on a small screen.

The product is set to compete with Google, which is planning to introduce its Google Glass system later this year. These wearable glasses include a screen showing computer data at the edge of the field of vision of the right eye.

The computer inside is able to take photos and video of what the wearer is looking at and share them immediately online, or show information about the surroundings.

The Sony SmartWatch
The Sony SmartWatch is looking to steal a march in the wearable technology market .

There are other smart watches on the market, such as the Sony SmartWatch, which is Bluetooth-enabled and uses a swipe action to scroll. Features include email, access to Facebook, Twitter, SMS and a music player. The Sony device has been poorly received, with Gizmodo calling it "maybe the worst thing Sony has ever made". But Apple may be able to do it better, as it did with portable music players.

Nevertheless, the commercial value of smart watches is still debatable. Microsoft launched the Spot (Smart Personal Object Technology) watch in 2004, but it didn't take off, and the watches were discontinued in 2008.