Last week was all about Apple. No matter where you turned, it was either iPhone or Apple Watch, and there was no getting away from it.
That is standard fare around an Apple launch. Hype reaches fever pitch.
The launch also marked a more concerted push by Apple into the wearable technology market, ditching the high-priced Watch Edition gold models spotted on the arm of Beyoncé and Karl Lagerfeld in favour of a more reasonably priced ceramic version and a model designed for runners.
Eighteen months after Apple dipped its toe into the wearable technology market, it has unveiled an updated version of the Apple Watch, dubbed Series 2. The new version of the watch comes with some extra features and updated technology, including a new chip that promises to make Series 2 faster than its predecessor.
“Apple Watch has really changed what people expect from a watch,” Tim Cook told attendees at the product event in San Francisco last week.
Then he revealed some surprising statistics. In 2015, the top five watch sellers in the world, measured in revenue terms, were Rolex, Fossil, Omega, Cartier, and Citizen. After its launch last year, Apple Watch sneaked in at number two.
“It became the number two-selling watch in the world despite only shipping eight months in 2015,” Cook said.
That may not quite fit with the narrative that the Apple Watch is a flop with consumers. Apple has yet to release concrete figures on the sale of the watch. But experts believe the first year’s sales figures are in the region of 12 million.
Despite being a latecomer to the wearable sector, Apple Watch has, by all accounts, done well. According to Cook, it is the top-selling smartwatch, and independent figures back that up. That said, the smartwatch sector is still in the early stages.
Slide
In July, research firm IDC estimated Apple had sold 1.6 million watches in the second quarter of the year, a fall of about 55 per cent year on year. The Series 2 could halt that slide. With built-in GPS, it answers some of the questions raised about the original’s usefulness without a phone to which it could be tethered.
It is also waterproof, so can be used in more sports, and the new version of the software will also track open water and pool swimming.
Apple has signed deals with Hermes and last week announced a tie-in with Nike – a not entirely unexpected development – on a fitness-focused watch branded under the Nike+ umbrella, hoping to shore up the company's support in the high-end fashion and sport markets. Nike, if you recall, had its own wearable division up until a few years ago when it decided to concentrate on software development rather than hardware.
The new watch will also come with the latest software, Watch OS3, installed. That will make the Watch faster to use, eliminating the frustrating wait for apps to load and indicating that Apple has learned from the past 18 months with the Apple Watch.
Some are taking Apple’s latest announcements as an admission of defeat of sorts.
Apple is making an admission that it's not a luxury product in watches," said James Dowling, co-author of The Best of Time: Rolex Wristwatches. "In fact, it's making a declaration that it's no longer in the watch business, but that it's in the health-tracking business."
Like many smartwatches. Apple Watch still faces one major hurdle: pricing. Starting at €349, it’s not a throwaway investment. There are cheaper sports watches and bands; the Blaze, for example, costs €220.
You also won’t be passing the Apple Watch – even the Edition – down to your great-grandchildren in years to come, because it will be obsolete in a relatively short period of time.
Already, 18 months after its launch, the original version of the watch is looking like it’s behind the times; Apple will continue to sell it but it will have an updated chip to make it faster. That means early adopters are the ones missing out, unless they want to upgrade as often as they upgrade their mobile phones. Invest in a Rolex, though, and you will find your investment appreciates in value.
While Rolex may be unperturbed by Apple’s entry into the top five, its rise in the watch sector is seen as more of a threat to lower-end brands. Fossil and Tag Heuer are among the watch brands that have added connected versions of their devices in an attempt to capture some of the market.
And Apple doesn’t have a clear run at the smartwatch sector. IDC estimated rival Samsung sold 600,000 smartwatches in second quarter of the year, a rise of 51 per cent, and Lenovo comes in third, rising 75 per cent to reach 300,000 sales in the quarter. Apple is still in the lead with about half of the smartwatch market, but Samsung is set to ramp up the competition with the third generation of its Tizen-based Gear smartwatch, the Gear 3, and the release of its fitness watch, Gear Fit 2.
Samsung has learned from its mistakes too. It initially tied down its Gear watches to a select number of Galaxy devices, but later rowed back on that, opening the smartwatch up to all Android devices running a certain version of the operating system. That opened up the market to a lot more Android users than before.
The fitness sector is seen as a crucial one for smartwatch makers. Much of the usefulness of Apple Watch has concentrated on its usefulness in the fitness sector. The Apple Watch’s Nike tie-in is intended to appeal to runners with a more lightweight version that includes exclusive watch faces.
Other contenders
But there are other contenders in the fitness market alone, such as Fitbit. The company, which recently opened its European headquarters in Dublin, has a smartwatch of its own that is aiming for the fitness fanatics, the Fitbit Blaze. Unlike the Apple Watch, it has a battery life of up to five days, which means less time to spend recharging it And it is compatible with Android phones, which accounts for a large number of smartphones these days.
The company has a current active user base of around 17 million.
It’s not just about counting steps, though. Apple and others have been looking at delving further into the healthcare market through research and health-aimed programmes. For Apple it’s the growing use of ResearchKit; for Fitbit, the company has seen its technology used in studies for breast cancer and the impact of activity on recurrence rates.
But the health and fitness focus may not be enough for industry watchers waiting to be convinced that Apple can use the Watch to offset the slowing growth in its iPhone business.
“Apple is responding to what has resonated with customers,” said analyst Jan Dawson of Jackdaw Research. “The problem is there are only so many people who want to wear a health and fitness device. If they want this to be really massive, they’re going to have to go broader.”
(additional reporting: Reuters, Bloomberg)
