Apple Watch is a make-or-break product for the smartwatch market: Control Shift
Wednesday, March 11, 2015/
The biggest news in the tech world this past week has been Apple’s press conference about its Apple Watch devices, including an April 24 release date and pricing for the new devices.
Coming hot off the heels of the Mobile World Congress, the announcement was almost certainly timed to distract from a certain South Korean conglomerate that shan’t be named in a polite column about Apple, and its latest flagship.
At the moment, there’s a lot of hype about how it’s a new trend for tech companies to try to combine the latest electronics with watches. The truth is that this is a market tech companies have been trying to crack since the first digital watches came out in the mid-1970s, when the likes of Commodore, Sinclair, HP and Intel all tried their hand at horology.
Initially, digital watches sold for around $US2100 ($2763.23 at the current exchange rate). However, the market was quickly saturated and the bottom fell out of the market. By the late ‘70s, Commodore cleared out its inventory by selling a smartwatch for just $US7.99 to anyone who bought a four-pack of pudding.
Needless to say, there’s no shortage of tech companies that hope things will be different this time around. But from Asus’ ZenWatch to Motorola’s Moto 360 and Samsung Gear S to Sony’s SmartWatch 3, there’s been no smash hit device yet. Even Google’s Android Wear platform has failed to gain traction so far.
Sure, smartwatches can bring notifications to your clockface and apps on your wrist, and being able to do a voice search without pulling out your phone or tablet is nifty.
However, a majority of the people inhabiting the planet already carry a far more powerful device with a larger screen in their pocket or handbag, in the form of a smartphone.
The crucial unknown factor, as with augmented and virtual reality (and for that matter, all other emerging technologies), is whether third-party developers can come up with a killer app that justifies the purchase.
That being said, if ever there was a company that can get away with planned obsolescence on a $14,000 piece of gold alloy jewellery with a non-replaceable battery, it’s Apple.
So the real question is, once the initial queues die down, what percentage of iPhone customers can be upsold on the idea of spending a minimum of $499 extra for a watch?
If Apple can upsell its watch to even 10% of its iPhone customers, that equates to between 4 million and 7 million devices per quarter – enough to create a viable market for other businesses. More importantly, a strong Apple Watch will most likely work to increase consumer interest in some of the smartwatches being hawked by Apple’s rivals.
However, in the unlikely event that the Apple Watch flops, you can tag the toe of the smartwatch market. After all, if not even Apple, with its incredibly loyal user base and $22.6 billion in quarterly profits can’t crack the market, what hope does a Sony or a Lenovo have?
So while Apple is far from the first tech company to try its hand at horology, if it stumbles or app developers fail to deliver, it could perhaps be the last.
This leaves the question: what should your business be doing when it comes to smartwatches? Right now, unless you have an idea for a killer app, it’s time to watch what happens next.