Apple Watch Forecasts

Apple have sent out invites for an event on Monday with the words “Spring Forward”, no doubt timed because the clocks are about to change (to summer time) this weekend and perhaps on Monday too in Cupertino. 

Nearly 1.1 billion watches are sold every year, but only 30 to 50 million luxury watches are sold each year, mainly from Swiss manufacturers. It will be interesting to see how the smartwatch market interacts with the traditional watch market, will it augment or cannibalize the market? ABI Research expects the smartwatch market to be of a similar size at 28 million units shipped in 2015.

Unanswered Questions 

Apple has a number of questions to answer on Monday, including;

  • What is the price range of the 3 different SKUs; we know the starting price is $349, but what about the aluminum and gold versions? Also, all the strap combinations, 34 to date, (34 Apple Watch SKUs) which are much needed given the bland nature of Apple’s square watch design. This fragmentation is in line with the luxury watch market, for example the has 8,477 male and 7,298 female watches, illustrating the challenges of this technology meets fashion category.
  • How quantified will the self be? – The Apple Watch announcement in September featured the liberal use of the word “health” a loaded and regulated word in many markets around the world. Rumour has it that Apple has retracted some of their sensors and ambitions in this regard as the wrist can be a difficult place to achieve the required accuracy for heart monitoring and blood pressure in particular for example. So it will be interesting to see what is contained in the Apple Watch and therefore what services they enable and furthermore, to what extent they can be used as fitness or health indicators.
  • Voice, gesture recognition and haptic UIs – we are hoping to see a Siri on steroids, some subtle use of gesture in the UI and communication to the user via haptics (see below). Gestures to turn the watch on, ignore a call, etc. There are more than a dozen ways to interact with the watch, from receiving glance-able notifications, to haptic feedback, to Siri, according to the WatchKit developer software.
  • Alerts – providing a communication extension to the smartphone in an immediate, effective and more convenient way (then the smartphone) is crucial to long term engagement, as it provides regular daily, even minute by minute value. While quantified-self data can have a profound impact, it is not something that has an immediate impact, but is more of a long game, be it weight loss or over all wellness. Effective integration of alerts, by understanding the wearable use case are a key part of creating early value and consistent engagement and usage of the device. Therefore, smartwatch alerts need to be better than the smartphone. An obvious statement, but not always achieved. This can include filtering out non-priority messages and senders. Using haptics and/or colours to distinguish importance and sender groups (family, bosses, etc).
  • There was very little detail about the Apple Watch battery life, but Tim Cook has since said that the smartwatch is designed to be "worn all day" and "simple to charge at night." "We think people are going to use it so much you will wind up charging it daily”, much like is advanced OS smartwatch competitors. It will be interesting to see if Apple have done anything around a low power sleep or battery save mode. Charging is also an area of potential innovation, with wireless charging and energy harvesting growing in importance as device proliferate. 
  • Other apps featured in the Apple Watch video include iMessages, Health, Calendar, Weather, Mail, Photos, Camera button, Apple Maps and most importantly Passbook including Apple Pay, something that could create the all important daily value.

How Apple creates a cohesive value proposition integrating hardware with software and services is as always the key. The three main areas of wellness data and services, Apple Pay, along with creating an intelligent and differentiated relationship between the watch and the smartphone must be the foundations of the Apple Watch proposition.

ABI Research expects Apple to ship 13.77 million units, just under 50% market share. Due to;

  • Its unparalleled ability to integrate hardware and software into a cohesive value proposition that consumers understand. i.e. Apple devices are a window into a world (ecosystem) of possibilities.
  • The near religious ardor of Apple’s fanbase
  • Also Apple’s uniquely premium brand and therefore its appeal to affluent consumers all over the world (as proven by the stellar Q4 2014 results), which will be important given the starting price point.

Our smartwatch forecast for 2015 sees growth of 452% year on year. Obviously this growth is not just driven by Apple. Smartwatches have come a long way in the past 12 months. LG and Huawei launched stunning looking and feature packed devices at MWC this year. Here’s hoping Apple can provide the wearables category with a welcome boost on Monday.