With a market capitalization of about $730 billion (blowing away second place Exxon-Mobil by over 2x) and nearly $200 billion in cash, Apple has more than recovered from its days of languishing in the 1990s. Attempting to build on its success with the iPhone and iPad, which ignited the smartphone and tablet markets, the company just introduced its first wearable device, the Apple Watch (a name that, perhaps unsurprisingly, breaks from tradition by avoiding the surveillance-evoking “iWatch”). But is it boosting a hot new product category, or are smartwatches a futile attempt to artificially create a new gadget market?
Imagine a new “smart” device that we might dub the iGrain. It’s the size of a grain of rice, it can network with your smartphone and offers a number of similar features in a tiny package. Sound appealing? Between the tiny display (perhaps the product should be called “myGrain”) and 3.5-second battery life, as well as the tiny subset of features already available in your pocket via a smartphone, you would probably see no point in adding the iGrain to your device collection. So, at some point the appeal of a smaller, more limited device loses its luster.
Enter the smartwatch. Smartphones are already on the edge with regard to their screen sizes (hence the growing popularity of so-called phablets), so a device that fits on your wrist is already at a disadvantage. As Zero Hedge sarcastically remarks, the Apple Watch “even has apps that allow you to do a few of the things you’d be able to do if only you could muster the strength to dig your hand into the front pocket of your jeans, or do a little digging in your handbag.”
So, it’s (like other smartwatches) a device that doesn’t really do away with the smartphone, nor does it offer the same set of functions. So what advantages does it offer? Ergonomically speaking, you probably wouldn’t want to look at the tiny screen for very long—for instance, try holding your wrist at an ideal viewable angle for 5–10 minutes and see how it feels when you’re done. A smartphone in the hand is at least a bit more comfortable and probably less conspicuous than that odd semi-rotated wrist and elbow that sticks out.
To return to the matter of the screen, the amount of useable information you can access is severely limited. (And please don’t even start with matters of productivity—even tablets are a bust in this department.) Smartwatches may also hearken back to the old calculator watches, which gained a reputation for nerdiness, to say nothing of their questionable value owing to their tiny buttons.
Another Achilles heel of small devices is battery life. The Apple Watch is listed as having at best 18 hours: in other words, expect to have to charge it about twice a day if you plan to use it for anything other than a pretty ornament on your wrist. But for just bling, you could probably do better than the $350 minimum price—or $10,000 for the gold version. (If you have a lot of money burning holes in your pockets, note that Moore’s Law will never obsolete a Rolex.)
Apple provides the opportunity to consider whether smartwatches offer any real value to consumers in the manner of a tablet or smartphone, but it’s not alone in this market. Other companies, such as Samsung, offer similar products that run into the same issues. What’s interesting about Apple is that a company with such vast resources would make a fuss about something that has arguably limited potential. Mark Sigal notes in a blog post that the “iPhone was a ‘you know you’ve been wanting something like this, but didn’t know it was possible’ type of device... By contrast, Apple Watch is a schizophrenic beast. It is a harmonious extension and unique derivative of iOS and the iPhone. It is a luxury watch. But the fact that it’s an Amalgam of both makes it some kind of Other.”
Thinking up a new, revolutionary product (or simply making a marketable version of such a technology) is a difficult feat—and it’s one that huge companies awash in money have trouble doing. Witness, for instance, Google Glass, which has been dying almost silently after an initial buzz. Perhaps illustrating the dangers of the wearable market, users of Bluetooth headsets are regularly marked for ridicule (my personal favorite epithet is “Borg”).
The issue here, then, is not to pick on Apple per se, but to ask why the company sees value in this market. Is it because it honestly believes it can overcome growing suspicion (and inhibition) regarding wearable devices—perhaps outside of a few specialized markets like health and fitness—or is it a mark of an overly large and bureaucratic organization whose day is heading toward sunset? One might recall the glory days of Microsoft, for instance, which was once the leading candidate for taking over the world (before Google came along). A market smash like the iPhone and iPad are difficult enough, but repeating such successes is nearly impossible, which may in part be why so many historically influential companies (HP, IBM, Microsoft and so on) seem to be increasingly wayward.
Given Apple’s position, one product flop wouldn’t necessarily mean the demise of the company. Microsoft, for instance, continues to push its Surface line despite dismal past sales. Assuming the Apple Watch fails to gain market traction, the worst result is probably just a loss of momentum. Unlike the iPhone and iPad, which more or less pursued markets with little real competition, other companies already offer smartwatches. Apple’s entry therefore represents a less bold endeavor compared with previous products.
Wearables seem to have much in common with the Internet of Things (IoT): they have many hypothetically wonderful applications, but in reality, they may be more trouble (or less value) than they’re worth. Sticking a processor into anything and everything is also a good way to ensure faster obsolescence.
Apple has plenty of money to throw at a risky project like the Apple Watch, so even if it’s a complete flop, the company won’t be hurting too badly. The broader concern is why it would focus on this market in particular. Smartwatches are like Bluetooth headsets in that they may offer some incremental convenience, but the social price (not to mention the monetary price) seem awfully high for such minor benefits. One might instead expect Apple, with all its vast resources, to focus on a more revolutionary campaign. Perhaps, though, consumers have reached a saturation point with “smart” devices: Internet-connected shoes, underwear, glasses and (fill in the blank) simply lack the punch to become, even collectively, a market like that of smartphones and tablets. Apple’s pursuit of the smartwatch market could represent a turning point, both for the company in particular and consumer interest in general.