Apple Inc. (AAPL) Will Dominate SmartWatch Market In 2015, But Do Customers Really Want One?

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Apple Inc. (NASDAQ:AAPL) stunned the world once again on September 9 by launching its newest product, the Apple Watch. This is the Cupertino-based giant’s newest addition to its product line-up since 2009, when the first Apple iPad was announced. As expected, the Apple Watch boasted some interesting features such as the digital crown and various health and fitness monitoring capabilities. The arrival of the Apple in the wearable device shipments category has re-ignited the fledging smart-watch market, where shipments have already risen by 684% in the first half of 2014. The Apple watch is all set to hit retail stores worldwide starting from 2015, and is already expected to dominate the market.

apple_tim-cook-one-more-thing

Market Research Analyst firm Canalys has predicted that Apple will effectively dominate the smart-watch market in 2015. However, it would be smart bands that would lead the wearable market, atleast for next two years. Shipments of wearable band will grow 129% Y-O-Y, to sell a total of 43.2 million units in 2015. Of these, 28.2 million sold will be smart-bands, while 15 million units will be basic bands.  Currently, the leaders in this segment are Samsung Electronics Co Ltd. (KRX:005930) , Jawbone and a host of other players  such as Motorola, LG Electronics Inc. (KRX:066570) and Sony Corp (ADR) (NYSE:SNE).

Why Would Customers Want  A Smart Band?

The new range of smart-watch devices have been greeted with much skepticism by consumers. Several vendors have offered no solid reason why a customer would ever need one. Although wearable technology such as Google Glass, fitness bands, and health monitors already exist,  these are still early days for wearable technology as no one has figured out what they are truly meant for.

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worldwide smart band shipments forecasts 2014 2015

Sensing the mood, Apple has tried to spark interest through health, fitness, navigation applications as well as workout, activity tracking and mobile payments. But the company is intelligently trying to satisfy two markets by loading features of a smart band and smart watch in one device, Apple Watch. The other players in the market, meanwhile, such as Xiaomi have already unleashed a price war by launching basic bands such as the Mi band at a jaw dropping price of US $13. Google too, has pitched Android Wear as a practical ecosystem to compete with Apple Watch. The long term vision of all these device makers will be to extend the capabilities of smartphones, and offer clear value to customers who will be looking to prove the purchase of yet another connected product.

Apple Smart-Watch Expected To Dominate Market Next Year

Apple’s arrival in this field is extremely significant for good reasons. After pioneering the MP3 player, smartphone and tablet devices, there is immense pressure on the company to repeat the same with smart-watches. With a high price tag of US$349, the device will appeal to initial consumers with plenty of disposable income. Just as with smartphones and tablets, this will create an opening where cheaper and better products will soon enter the market, thus turning smart-watches into everyday mainstream products. Canalys analyst Daniel Matte explained the reason why is Apple’s smart-watch the clear winner among all other brands.

‘By creating a new user interface tailored to its tiny display, Apple has a produced a smart watch that mass-market consumers will actually want to wear. The sleek software, variety of designs and reasonable entry price make for a compelling new product. Apple must still prove, however, that the product will deliver adequate battery life for consumers.”

Disruptions Will Affect Apple’s Performance Quickly

Apple may have the upper hand initially, but just as with smartphones and tablets the market is prone to several disruptions. As Apple is trying to satisfy two different breeds of hand-wearable device – Smart band and Smart Watch – Fitbit and Jawbone will have the advantage of low-priced products in the near-future, but competition is sure to escalate. This will in turn push the prices of smart-bands even further down, and match the prices of basic bands. With the market poised to grow to 373 million units by 2020, this is a segment with enormous opportunity. The current trends bear characteristics similar to the feature phone market, which was several disrupted when smartphones began to appear.

apple-watch

Apple still has plenty of opportunities ahead in the coming months with the release of the iPhone 6 and iPhone 6 plus. Million of units of both devices are expected to be shipped worldwide and trigger Apple’s biggest iPhone upgrade cycle. If the Apple Watch can match the iPhone’s success, the company will have transformed the world once again.  For now, though, Apple’s Watch has been criticized for being overpriced and under-innovative, but it has undoubtedly re-ignited interest in a device that has long been considered obsolete. However, it would be also interesting to see how Apple could kill two birds with one stone!

7 COMMENTS

  1. RicardoMont1
    I was perfectly clear what part of the phone I think is clunky and why it is so. I didn’t mention the interface but the crown knob. The user interface (touch display) has the same usefulness as any other smart watch out there, but the introduction of the crown as an additional element is just clunky because of the constant switching from screen to the knob back to screen and then to knob and so on.
    If you look at some of the demo clips you will see what I mean by clunky.
    They should have completely left out the knob and made everything  operational through the touch screen.

  2. Nathillien You’re definitely one of those people who really need to use one for a short while. Apple has been working on it for 3 years and I hardly think that they would choose a “clunky” interface. You’re talking about a company who is the undisputed leader in the user interface arena, and I for one would hold off my judgement until I get to wrap one around my wrist for a bit.

  3. The crown nob is such a clunky solution for zooming in and out.
    I cannot believe they couldn’t find a better solution for that problem.
    Especially if someone wants to zoom something big as maps. Since initially the map will not be exactly over some area of interest a combination of zooming (dialing the knob) and moving (sliding the screen) and zooming and moving and zooming and moving …  will be necessary to do so.
    Clunky – and they call it a feature.

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