April 23, 2012

Would Apple Create a Smartwatch? If So, When?

Apple
Earlier this year, I wrote an article here suggesting four industries Apple could disrupt, and one of the industries I mentioned was the watch industry.

When Steve Jobs introduced the touchscreen iPod Nano in 2010, he mentioned that one of his board members said he was going to find a way to strap it to his wrist and use it as a watch. And shortly after the Nano was released, a cottage industry of Nano watchband makers started to emerge – today you can find over 100 colorful watchbands that turn Nanos into watches.

But in my article I stated that for a Nano watch to be disruptive, it would need a Bluetooth connection to the iPhone to serve as a kind of visual companion showing who might be calling, iMessages, news alerts and more. The Nano watch would not make me take my iPhone out of my pocket to see these alerts or key bits of information unless I needed to act on them.

To date, Apple has not added any of these features to the Nano but even if they do, they will not be the first to take this concept and run with it. There have been two recent announcements about watches that work as companions to smartphones, and both show a lot of promise. One is from Sony and the other is coming from a start up called Pebble.

Sony’s Watch is basically like my vision of a Nano watch but with Android’s OS inside. It uses a color OLED screen and serves as a connected companion to Android smartphones. It sells for $149 and is on the market now. It has a Bluetooth connection to any Android phone so that certain bits of info coming through the phone can be seen on the watch.

But the Pebble smartwatch is the one that’s the most interesting to me since it can be used with Android or the iPhone. And while its screen is not a color OLED like Sony’s, its e-ink screen means this product has a very long battery life and can be even thinner than Sony’s version. Both connect to smartphones, which then deliver info to the watches.

While Sony’s smartwatch is coming from a major company, Pebble’s approach to creating their smartwatch is quite unique. Instead of raising funds to build this from friends and family as many start-ups do, they appealed to the public through Kickstarter — a launching pad for various tech products — for pledge funds that will be turned into actual shipping orders of their smartwatch when it ships in September. They are not the first to try this approach but their pitch seems to have struck a nerve, especially with early adopters. They had hoped to raise $100,000 from these pledges, but they’ve actually gotten pledges worth over $6 million to date.

With all of this interest in the Nano being used as a pseudo-smartwatch and these new entries from Sony and Pebble, as well as earlier models from Motorola and others, is it time for Apple to create their own iWatch with iOS on it, tied directly to the iPhone? Given this competitive pressure, you would think the answer should be yes. But if history is our guide, doing something just to counter the competition at this early stage of smartwatch interest isn’t Apple’s style.

We have solid examples of how Apple actually looks at these market opportunities and eventually responds. For example, Apple did not invent the MP3 player. But once these devices had become established as products with potential, Apple released the iPod and made an MP3 player that was better than anything on the market at the time – and today it still owns 75% of the MP3 market.

Now consider the iPhone. Apple did not invent the smartphone. But once smartphones took off, they brought out the iPhone, which today owns a major position in the market. Apple didn’t invent the tablet either. But their model with this, as well as with the iPod and iPhone, is to look at the fundamentals surrounding each of these products and then apply their genius of design, ecosystem and marketing to a category of devices they feel they can make exceptionally better.

While Apple may not be first in a new product category, their approach to making products better and then using their design and marketing prowess to take very strong positions in these markets is at the heart of the way the company works. Today, smartwatches tied to smartphones are in their very early stages — and they show promise. But don’t expect Apple to respond in kind just because the competition in this space is heating up. Instead, look for Apple to monitor these early smartwatch trailblazers and once they believe they can create something that is very sleek and elegant, then – and only then — would they bring out an iWatch.

One interesting side note to this is that watches on a whole have been on a decline with Gen Y and Gen Z users who rely mostly on their phones to find out what time it is. But if the watch is tied to their smartphones, this could actually reverse some of this decline in watches. Even Gen Y and Gen Z, who are major gadget lovers, might just start wearing watches again.




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