If You Want My Thoughts on the Apple Watch - This blog from last year is still 100% valid

Some may visit the blog today looking for my thoughts on the Apple Watch. Today's Apple event gave no reason for me to change my view from September (but lots of reason now to be even more sure that is what will happen). If you missed my blog, about why Apple Watch is a rare Apple failure which sells well in the first year but by the second edition is seen as the iFlop, the blog from September is here.

Update 10 March: I now have my definitive Apple Watch article done. (please note the discussion thread here is closed, we continue the Apple Watch debate now in comments at that new article)

Comments

[Earendil Star]

My greatest doubt is on battery life.
Then what added value it may bring.
But let's see.
One thing is certain: whatever Apple does, the tech press goes crazy in praise. An advantage few others enjoy.
It all adds up to the Apple mania. Well done, Apple marketing guys. But still: Let's see.

[tz]

18 hours battery. Hours, not days. At least you can use a tethered recharging smartphone.

[AndThisWillBeToo]

The moment Apple made an edition of the watch that costs $10,000 they wrote "not a mass market product" all over Apple Watch.
Yes, it will fail as mass market product since it is not one.

[Catriona]

I had already decided to get one, but I was a bit surprised that they didn't focus more on the fashion aspects today. I expected to see Angela Ahrendts on stage, showing off the stainless steel model with pink buckle. Kevin Lynch's demo was a bit long, too, and didn't really reveal much that we didn't already know. That said, I was pleasantly surprised by the pricing of the mainstream versions. I was thinking that higher-end link band versions might go for closer to $2,000.

My view is that this will be a modest success. Adobe did a poll and found about 28% of iOS owners were likely to consider getting one. Let's say 10% actually do over the next 2 years. That's around 25-30 million, which is quite a lot for an accessory. I think Apple will keep the band designs the same for a while, so when it comes time to upgrade, you can just buy the watch body. I see a longer replacement time than with the iPhone, perhaps more like the iPad. Version 2 or 3 will be the one that gains more mass adoption, at which point it will mature.

The biggest challenge will be convincing people what this product does for them. That's up to developers. The good news is that this is getting this area a lot more attention. App developers weren't really interested in Android Wear. They seem to be paying more attention to Apple Watch, which ought to benefit Android Wear.

[Catriona]

@AndThisWillBeToo, I disagree. How is the Apple Watch Edition any different from Vertu phones, which are just bejeweled versions of ordinary phones? Obviously the Edition isn't a mass market product, but the $349 Sport and Apple Watch ranging from $549-1099 are. They are competing with the likes of Movado and Tissot. I wouldn't be surprised if next year Apple offers the devices "watch only" for $49 less than the current base prices. So someone could get the $1049/1099 high end stainless steel link band version and every so often update the watch for $500/550.

The Edition seems like an attempt to cater to the nouveau riche in China, as well as the investment bankers in New York looking for creative gifts for their wives/girlfriends. It might also get them some window space at some jewelers, some of whom might also sell the stainless steel version.

[Catriona]

@LeeBase, which model would you get? If someone else were paying, I'd certainly like that $17,000 Rose gold with rose gray leather, but more realistically the space black stainless steel or one of the modern buckle stainless steel models look pretty sharp, too, and at $1049 or $749 are cheaper than what I was expecting. I think your estimate of 10 million sold is reasonable, though I think it could be closer to 15 million.

[Lullz]

This is like calling Nokia 7650 as a flop. It was selling reasonably well because Nokia fans were buying the product but it never gained any true market share. For that it needed new versions and it needed to be improved.

[Catriona]

@Lullz, the difference here is that the current crop of devices has set a fairly low bar. I don't think this will be a blockbuster. However, if it sells 10-15 million per year it would easily be the best selling device in its class. Since it requires an iPhone, by definition it appeals only to Apple fans. I think it is unlikely to draw lots of people specifically to iOS the way that the iPhone and a lesser extend the iPad did, but will it bring more overall sales revenue and profits to Apple than if it hadn't been released? I think so. It also has the potential to legitimize the category.

Also, I do believe that it will be improved in future iterations. Battery life may improve, for instance. It may gain cellular connectivity in the future, but only when it isn't such a drain on the battery. Apple has life-sized images on its iPhone app. The Watch is smaller than I expected and smaller than similar Android Wear devices. I think even the 42mm looks like it would fit nicely on my small wrist. Future versions may get thinner, and we may see other shapes and designs, as well. Remember, it took a few years for the iPhone to sell in massive numbers, and the iPod didn't really sell well until the third version in 2003.

[curious]

Tomi, two questions,

1)iPhone/Apple watch carrier bundling:
In the event of less than stellar Apple watch sales as time passes, would there be any scenario where the carriers would then agree to bundle an Apple watch along with an iPhone for some objective usage cohesiveness within their subsidized device model (maybe through some carrier data mining mechanism--carrier IQ for watches)? An "iWatch Everything You Do" kind of thing.

2)Class Stratification through Pricing:
Did Apple just negatively impact the psychology of their rabidly loyal Church-O-Apple fanbase? Until now, the only mindlessly expensive iDevices have been through third parties who've taken iDevices and plated or bejeweled them and such like. Hence, pretty much anyone in developed countries, particularly when leveraging carrier subsidies, could afford to own the best (top of the line) official iPhone/iDevices, even as relatively expensive as they are. This is no longer the case. The dynamic has changed drastically now. Far fewer are able to even attain (or justify)the Stainless Steel version unsubsidized, never mind the 10-17K Edition.
Myself, being a tirelessly vociferous Apple detractor (based on their unyielding, summary control-freakery on devices they do not any longer own)property rights issue), my personal observations of the iSheep's reactions to my posited points are very often that I'm just a hater because I can't afford an iDevice and am therefore jealous of anyone who can. These individuals seem to identify their entire self worth based on the fact they are able to buy the highest end (official) iDevices and noone regardless of their wealth or social strata can buy a better (official)iDevice. By Apple officially joining the realm of selling directly to the very elite, upper crust, are they relegating every other iDevice purchasers to the realm of the riff-Raff, as I've heard them describes on any number of occasions today when the tech bloggers referred to the gold Apple watches, and are they then hurting their former brand perception that "All we Apple users are a better class of people"?
To further illustrate my point, consider an opposite scenario. This would be if government welfare agencies started giving away top of the line iPhones with bricks of government cheese to welfare recipients. Either the top-down or bottom-up scenarios render the masses of Apple devotees "Less Special", hence hurting Apple's brand.

[John F.]

The Apple watch we see now is the equivalent to to the first ipod, ipad and iphone.

All were laughed at and called flops... Stave Balmer lives in the internet due to his short sight regarding the iPhone and the comments he said, every other analyst/specialist made coments that are so hilarious that were compiled in a blog called apple death watch or similar name .... should be humiliating for some world famous people to read what they said and what happened ....

See u in a couple of years, when apple watch 3 hist the market .

PS. Keep this blog alive

[RottenApple]

@John F.:

"The Apple watch we see now is the equivalent to to the first ipod, ipad and iphone.

All were laughed at and called flops... "

There is one huge difference.

Both the iPhone and the iPod were a kind of device that already was a proven success. Granted, the iPad was not but there has never been anything like it before so it's hardly comparable

But the Apple watch... Sorry, but so far all smartwatches have utterly tanked in the market. Unlike a portable music player or a mobile phone, there doesn't seem to be any interest in the general public, this thing is squarely aimed at the geeks - and it remains to be seen if they alone can keep a product afloat.

That means that the resident iFans here are hardly any indicator, they fall right into the middle of the target group of this thing - but asking a regular iPhone user, they mostly don't show any interest at all, and if they do many are still skeptical and hold a 'wait and see' approach. Asking any non-iPhone user, they just laugh about the entire smartwatch craze. The point being, everyone sees the usefulness in a smartphone, many see some usefulness in a portable music player, still a lot see some usefulness in a tablet, but where's the usefulness in a smartwatch? How many use cases of a smartphone can be transferred to it, and how many genuine new use cases can it provide?

The entire smartwatch category seems to operate on Microsoftian terms. There is no sign of success, yet new products get thrown onto the market in the hope that something may eventually stick. And why does that happen? No, not because it has been shown that people want smartwatches (the past has clearly shown that there is no genuine interest) but for the sole reason that Apple is going to release one so the others don't want to risk to stay behind. For some weird reasons the entire industry is ogling at Apple in the hilarious belief that the only way to compete with them is to copy them to the detail.

I'm with Tomi here: The first Apple Watch will certainly find some customers who are interested in the format, but I have my doubts that it will last long beyond the novelty phase. It all depends on how large the real target group is, once those that tried once out of interest and don't become repeat buyers get subtracted again, and if the device can be produced profitably in such numbers without impeding production of more profitable products.

[peter]

Ì think the apple's goal is to install "apple" brand in highend product. this watch is only for their image i think. "real people" don't spend 18 000 euros (!) in an apple product. With this money, you can buy Two Rolex or Bell&Ross. this price is really ridiculous.

[Maggan]

I won't buy an Apple Watch. But I won't discount the product. It's generation 1, it will be a lot more interesting once it hits generation 3. Then the tech will have trickled down to the iPhone and maybe even other wearables.

Apple has some little money left from their pitiful sales of the iPhone, so they can probably iterate this product much like they've done with the Apple TV, at their own pace.

Still, I'm not sold on the watch form factor. But it will be interesting once this tech becomes truly wearable and interacts with clothes and such.

/M

[Like_A_Bosstonian]

What all this fails to address is that with the integration of Health Kit and now Research Kit, Apple is effectively using Watch to begin segmenting users by those who are willing to pay for access to a higher quality of life. This is only achievable in a vertically-integrated model where you can create consistency of the inputs, software and output. There's a reason the sensor arrays, chipsets etc are all consistent from the $350 model to the $17,000 model. If you think this is a trivial value, you haven't looked at the size of diet, fitness, nutritional supplements, pharmaceutical and healthcare markets.

The overt positioning of watch as an accessory is merely another driver for iPhone purchases/upgrades, adding another tool to the kit of competitive differentiation on the high end. Which level of self-expression the user ascribes to this token is dependent on their discretionary spending/luxury aspirations. The value of Apple Watch is a combination of functional value + intrinsic value (materials, rarity, social signaling), thus far Android Wear devices have been overly reliant on the functional value (which they still trail/have ill-defined), with no clear ability to leverage the second half of the equation.

I'm a big fan of Tomi's writings, but sometimes his anti-Apple biases (still one of the last remaining analysts trumpeting declining Apple market share, while the company sucks all profits out of the mobile industry) clouds him from the bigger picture.

[RottenApple]

@Like_A_Bosstonian

"What all this fails to address is that with the integration of Health Kit and now Research Kit, Apple is effectively using Watch to begin segmenting users by those who are willing to pay for access to a higher quality of life."

Sounds like marketing bullshit. Define 'Higher quality of life' first. Expensive gadgets and accessories do not make life better as you seem to think.

"I'm a big fan of Tomi's writings, but sometimes his anti-Apple biases (still one of the last remaining analysts trumpeting declining Apple market share, while the company sucks all profits out of the mobile industry) clouds him from the bigger picture."

But the market share IS declining! As long as the market grows and competitors act stupid Apple is safe. But it's not a question of 'if' but rather 'when', that the market gets saturated, both in quantity and quality. What then? The current state of insane hypergrowth must come to an end eventually and then it's goodbye insane profit increases. And it remains to be seen how well Apple is equipped for that. Their entire reputation hinges on being the super-profit-machine.

[Timo M.]

I found some numbers saying that Swiss watch makers sell about 30 million watches per year. Who else makes high end watches? Who cares. This should be the absolute highest number possible that Apple could ever achieve. These buyers actually use expensive watches.

What is the market size of smartwatches? Some estimate said 12 million pieces in 2015.

I would call it big success if Apple sold 3 million pieces in the first year. That would be 10 % of Swiss market and 25 % of total smartwatch sales. Those are huge numbers to grab in a crowded place. Swiss watch makers are not even in the same market other than pricewise. Yet estimates in the press are between 20 and 60 million.

If you disagree I don't mind. It took five minutes to google the market size and these numbers might be totally wrong.

Apple smartwatch project made no sense to me until I read an article saying that the original plan was to pack it with a heap of sensors to monitor your body. They failed to work reliably. This is plan B: selling it as a heartbeat sharing fashion item with a hefty price. It is very unapple. Apple has been all about products. Either Apple is moving intentionally to this direction or Cook lost it under pressure to bring out the watch.

I am typing this on Apple products. Did Apple just turn me to a fashionist? Not bloody likely. My affection for Apple comes from the fusion of tech and art to great products. If that becomes billions of dollars or fashionable items so be it.

Of course I have not tested the watch yet. This is just my honest feeling about it.

[Mikhail Fomin]

Apple Watch May Be DOA As Cook Admits Battery Life As Low As 3 Hours

http://www.zerohedge.com/news/2015-03-10/apple-watch-may-be-doa-cook-admits-battery-life-low-3-hours
http://www.telegraph.co.uk/news/shopping-and-consumer-news/11461317/Apple-Watch-battery-lasts-as-little-as-three-hours.html

[Mikhail Fomin]

Official source: http://www.apple.com/watch/battery.html

[Catriona]

Regarding pricing, look at the typical watch you can buy at a shop like Burberry or a chain jewelry shop (e.g. Movado, Omega, Tissot). $549-$1099 is right in range for something with the build quality of the Apple Watch. Even the Edition pricing is in line with other 18kt gold watches, though technological obsolescence is an issue. I don't see price as being a major factor. If you read Jony Ive's interviews (FT, etc.) you'll see that they approached this as a watch, not an electronic gadget.

[Wesley]

When was the last time Apple had a flop? To my mind it was the Newton and that was in post Jobs dark ages. From the iMac, iPod, iTunes, iphone, Mac air, and the iPad - experts and analyst alike swore they were wrong. Just imagine if Apple listened to people like Tomi? Lol

Apple created 100 Billion business from nothing - Iphone
They are bigger than the largest CARRIER!

Nokia never in their wildest dreams did 100 billion with all of their massive market share lead.

Apple created another 50 billion business from nothing - iPad

Apple will do 10 billion+ with the Apple watch EASY and yet Tomi will call it a flop.

No other company on earth has the ability and track record in doing this - save Apple.

Like Jony Ive said "Switzerland is F@@ked" -

Doers do, and haters make predictions.