Apple Watch in Perspective

Posted on April 25, 2016 by Paul Thurrott in iOS with 0 Comments

Apple Watch in Perspective

Apple Watch is divisive among tech enthusiasts, with Apple fanboys eagerly declaring the product a winner and its detractors calling it an utter failure. As is often the case, the truth is a bit less well-defined, and the future of Apple Watch is of course a lot less certain.

My take is that the Apple Watch is inarguably the most successful wearable product ever released, with an estimated 12 million units sold since its 2015 launch. But this success is muted by the fact that the first version is terrible, many buyers have stopped using the device, and, worst of all, Apple Watch is clearly not the next iPad, let alone the next iPhone.

Apple, like other successful tech firms, has trouble moving past its most successful product. With Microsoft, that was Windows, and many readers of this site will recall the decades that the software giant spent foisting Windows-branded products on an increasingly uninterested public. (Windows Media Player for Mac is a great example of hubris run wild.) With Google, that product is Search, and everything else it does is (so far) a futile attempt to replicate that success elsewhere.

For Apple, that product is the iPhone, which today accounts for two-thirds of the firm’s revenues. As with Microsoft and Windows before it, everything Apple does today pivots around the iPhone. And so the Apple Watch as we know it today is not a standalone product at all. It is just an iPhone accessory.

And on that note, one might argue that Apple Watch is the most successful iPhone accessory ever made: Those 12 million units sold translate into a $6 billion business, assuming an average selling price of $500. So yes, Apple’s little Watch is bigger than Microsoft Surface. Much bigger. And few here would argue that Surface is anything other than a success. (Again, life is all gray areas: A few successful quarters do not obviate many billions in R&D and product costs, but that’s a different story.)

In an interesting coincidence, two recent Apple Watch articles have caught my eye, and have helped form what I think is a more nuanced look at Apple Watch’s first year.

First, CNET has highlighted the seven reasons why so many Apple Watch buyers are no longer using the device: It doesn’t do enough, it has limited strap options, it’s faster to just pull your phone out of your pocket, it’s too complicated, the apps an uninteresting, it’s too much technology, and there’s no killer feature.

I agree with a lot of that, though the strap thing seems like a weird complaint, given all the options. But this all translates nicely into something I’ve felt for a while: Fundamentally, the Apple Watch is a convenience, not a necessity, and that fact is what limits its success. This is true of other trendy tech products—Amazon Echo and its Alexa technology come to mind—and its even true of most wearables. But then that’s why I recommend Microsoft Band over Apple Watch: It’s far less expensive but it provides the right mix of usefulness and convenience.

The second article, Apple’s Watch Outpaced the iPhone in First Year, appeared in The Wall Street Journal this morning. As its headline suggests, this one is far more of an Apple fanboy magnet, which I’ve come to expect from the WSJ. But there are some good points in there with the circle-jerking too.

First, let me dispense with the ridiculous.

Comparing first-year sales of products released a decade apart is pointless, since the world of consumer electronics has exploded in the wake of the iPhone, which was itself only sold via AT&T (one of four U.S.-based carriers) that first year. Even the iPad outsold the iPhone in its first year, and that product line is wallowing in two straight years of declining sales. Point being, first-year sales do not indicate long term success. Heck, the iPhone proves that. (And the Apple Watch first year sales are only about half those of the iPad. I suspect Apple would like Watch to be a lot more successful than half an iPad.)

The WSJ also claims—seriously—that “the product’s fate is critical to the company.” That’s horseshit. As noted, the Apple Watch is an iPhone accessory, and its success as such speaks to the success of iPhone more broadly. Apple continues to seek—like Microsoft before it, like Google now—the Next Big Thing.

Where the WSJ starts to make sense is in a rundown of the Apple Watch’s shortcomings, because it is here that we can see a clear path to the future of the product. The first generation Apple Watch has an underpowered processor, it lacks cellular and GPS connections, its battery lasts only a single day (so does the Band’s, but again you’re paying a lot less for it), and it requires an iPhone: You can’t just use/configure Apple Watch on its own.

The WSJ, to its credit, also notes what I’ve been saying all along, that the device is not essential. “It does certain things well, such as activity tracking, mobile payments and notifications,” the publication explains. “But there is no task the Apple Watch handles that can’t be done by an iPhone or a less-expensive activity tracker.”

Apple Watch 2 or whatever they call it will no doubt fix only some of these issues, given Apple’s careful and slow iterative product life cycle strategy. But over time, I suspect that Apple will be able to make the Watch, if not truly essential, then more useful. And as for the millions of people who have purchased the first version, many are just fine with the device as it is, since it serves as a stylish reminder to the world that they can afford such a thing. That is, after all, the primary point of Apple Watch today, from what I can see.

Put more simply, the Apple Watch is successful today only because its an Apple product that can be used with the iPhone. For it to succeed in the future, it needs to do more, and it needs to do so on its own. And I bet Apple takes the necessary steps, again, slowly, to get it there.


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