Waiting for the DT Camera version…
Investors are being fed news of some massive Apple Watch sales decrease since its release. Oddly the overall percentage of the market of people that use the iPhones (iPhone 5 & up) that work with the Watch that actually bought the Watch is inline with historic sales trends of other accessory technology. Most technology accessories, from bluetooth headphones to keyboards to eye wear face significantly lower sales numbers. At the current Apple Watch price point, the percentage is actually abnormally high given inexpensive accessories run under $100 and might get 4% adoption (this translates to something you can observe: less than 1 in 20 people that own a tablet have a bluetooth keyboard.) Whereas Apple Watch owners are almost equal to that within a 2 month launch for a device that starts at $350. While only 1 in 5 people in the U.S. have an iPhone, of those, the number that have or plan to get an Apple Watch are 1 in 10, conservatively.
While the market penetration might not be impressive, when cast against the backdrop of other new dependent products from Apple in the same price category, such as the iPod, sales are much more impressive. Given Apple not being a company to completely give up on a product line, and only iterate and improve it over time, Watch sales are not even going to hit full steam until a killer app comes out for it. The iPod sold less in its first year than the Apple Watch already did this past few months. The iPod only got better slowly and its sales matched until the killer app made it ubiquitous. That “killer app” was the iTunes Music Store, and made it the de-facto standard against which all other prior and future digital music players were compared to, and it made “iPod” as synonymous for digital music player as “Q-Tip” is synonymous with cotton swab.
This first version might be as well received as the first Palm Pilot: early adopters, and those with significant discretionary income. But history suggests it will evolve to grow into a well established and sustainable iPhone market as PDAs did before being vanquished by smartphones. And just as Palm missed the smartphone boat, Microsoft also seemed to miss the mobile hardware boat: first with the Zune which took Microsoft 5 years to answer Apple’s iPod, and less than 6 to completely abandon it. Then with Windows various mobile branded phone OSes which was also abandoned again to finally release Windows Phone — again 5 years after Apple released its first iPhone. So, if I were going to bet, in just over 5 years Apple will evolve the iPhone into whatever the hot new device is (maybe iWatch sales will overtake iPhones if they become independent, and Tim Cook announces the new iWatch where the “i” stands for independent), while Microsoft will abandon Windows Phone and simultaneous release Windows Watch [less likely]. (At least their Xbox and Enterprise divisions are fairly healthy.) [Edit: Note this article was written before it was announced that Microsoft would be laying off almost 8000 employees from its mobile phone unit, further differentiating Microsoft’s “try and give up, and try again later only to give up” attitude towards new markets vs. Apple’s see what others do, then “try and improve slowly” until critical mass is achieved.]
If only Apple could crack the cloud — or have bought Dropbox. They might have been able to drive a stake through the heart that is the 1000 pound injured neanderthal that is Microsoft {“MS Neanderthal” makes me think of Steve Balmer}. Meanwhile the only viable competitor in the wearable computer category is Samsung, which is still having trouble cracking the riddle that is the wearables market. Google went too big with its gargoyle [see SnowCrash] idea, and smaller firms are eating the scraps of wearables with health monitors etc. But maybe one day Apple will turn its eyes towards a truly useful idea and breath life into a dual 5mm x 5mm HUD that attaches to any glasses, or can be made in prescription glasses with the Apple flair. But before that it will probably perfect the Watch, and possibly buy a current wearables company should any devise some sort of IP that is worth not developing in-house. If I were at Apple, I would probably be in a lab trying to figure out how to nanoscale holography right now. Pretty sure properties of understanding variable wavelength interaction might be useful to crack that one, but I digress.
Anyway, back to the present: no matter what the Watch is selling, it will go on to become a significant revenue generator. The only things holding it back are CPU die sizes and power limitations. Once it can last a day acting as a mobile communications device, it might make the current blip all but forgotten. I figure at some point Apple will toss a camera in there to make Dick Tracy style communications common. But anything can happen in the next generation. Some other concept could come out of left field and overturn our concept of how we interact with computers entirely as the GUI & mouse replaced the command line & keyboard for a majority of users. Only time will tell, but the Magic 8 ball in my mind answers that “signs point to ‘yes’” when I ask it if Apple’s Watch will be (or lead to) a bigger a success.
Thanks for reading.