Will Apple’s iWatch Successfully Make Wearables Mainstream?

Source: iWatch Concept by Todd Hamilton

Apple fans and investors, plus tech enthusiasts, may need to wait a little bit longer to get their hands on Apple’s rumored iWatch and find out if the product will be as resounding a success and as mainstream a product as they’d like it to be. According to trusted Apple analyst Ming-Chi Kuo of KGI Securities, the iWatch may launch later than initially thought. In a note obtained by MacRumors, Kuo says that the difficulty of manufacturing the iWatch is a factor in the delay of its launch until 2015:

We reiterate our view that iWatch, as compared to existing products, and as Apple’s (US) first attempt at a wearable device, represents a much higher level of difficulty for the company as regards component and system design, manufacturing and integration between hardware and software. While we are positive on iWatch and believe that the advantages of the design and business model behind it are difficult to copy, we think, given the aforementioned challenges, that the launch could be postponed to 2015.”

In July, Kuo predicted that mass production would begin in November, with the iWatch’s small size, flexible AMOLED screen, and sapphire cover all contributing to the complexity of the device’s production. As MacRumors points out, the language of Kuo’s report suggests that the analyst is still somewhat uncertain about when the iWatch will ship. His latest prediction seems to contradict the rumors that have widely suggested an October launch for the wearable device, but it is possible that Apple could introduce the iWatch months before it’s actually available to ship to consumers. Apple has made similar choices with past products, unveiling both the original iPhone and the Mac Pro six months before they shipped.

The good news for Apple, Apple investors, and Apple enthusiasts is that the iWatch — reported to come equipped with health and fitness sensors, and to integrate with iOS 8′s Health app — is expected to be unlike any other wearable device currently available. A delay in the product’s launch is unlikely to hurt Apple, as there isn’t another smartwatch that has appealed to a mainstream market yet.

In a piece for Re/code, digital media consultant Jon Maples recently wrote that despite early failures with wearable devices, the wearable market is expected to be huge. Credit Suisse projects that wearables will grow from $5 billion in 2013 to $30 billion by 2018, and IDC expects that companies will sell more than 112 million devices by 2018. But that will depend on manufacturers fixing what Maples sees as the two major obstacles that stand in the way of wearable devices going mainstream: their design and their value.

Most of the wearables released so far have been for specific, niche markets: early adopters of technology or athletes who need the data for training. The devices currently on the market don’t bring the general user enough value for consumers to purchase and continue wearing them. The clumsy designs of current devices further limit the audience for early wearables and make it clear that the devices haven’t yet become a product that the average consumer wants.

Manufacturers have so far failed to demonstrate how wearable devices solve a problem, as their tracking capabilities are uneven and sometimes even inaccurate. But as Maples points out, Apple excels at turning technology into desire by perfecting a product category and demonstrating to consumers how the new product is something that fulfills a need–  sometimes a need they didn’t know they had. The iPod effectively replaced previous MP3 players, the iPhone redefined the category of smartphones, and the iPad changed consumer perceptions of what a tablet could do.

The iWatch is expected to be a luxury version of the wearables we’ve seen so far, and in a best-case scenario would be a perfected version of a device that enables users to track their activity and health and fitness metrics, and makes that capability feel natural and necessary. Apple isn’t looking to invent a new product category but instead perfect it and make it accessible and desirable for the mainstream consumer.

But will the iWatch actually succeed in becoming a mainstream product? While investors and tech enthusiasts hope so, it’s easier said tan done. Maples suggests that there are five things that Apple needs to do to make its iWatch — and therefore, wearable devices – a mainstream product. He notes that the iWatch will need to be “fashion-forward,” or at least, if not fashion-forward, a watch that style-conscious men and women won’t be embarrassed to wear on a daily basis.

In what could be his most important point, Maples writes that the benefits and functionality the iWatch provides to the user need to be clear and limited, which will keep the watch’s purpose and pitch simple and easy to understand. Other necessities are that the device will actually work, leaving behind the inaccuracies of early wearables; that Apple will clearly demonstrate how it keeps users’ information secure and private; and that Apple will strategically target the iWatch to gain traction within a community of influencers who will help kickstart the product’s status as a cultural trend.

But each of those is a tall order, and many doubt not only Apple’s ability to introduce a wearable that’s vastly superior to all others on the market, and even the size of the market. Among those is Forbes’s Peter Cohan, who questions the projections of Morgan Stanley analyst Katy Huberty, who recently projected that Apple would sell between 30 million and 60 million iWatches in the first year after the product’s launch. Cohan notes that IDC expects worldwide wearable device shipments to reach only 19.2 million in 2014, growing by 78.4 percent annually to reach 111.9 million units by 2018. (Those numbers are somewhat similar to the 22 million and 135 million units that CSS Insights forecasts being sold in 2014 and 2018.)

However, as Cohan reports, assuming that Apple doesn’t begin selling the iWatch until next year and applying IDC’s growth rate to the market, the total market could hit 34 million units next year. That would mean that Apple would need to gain somewhere between 88 percent and 132 percent of the total market right away to hit analysts’ sales estimates — a number that makes those expectations look unrealistic even if the total market is expected to be larger next year, and even if Apple’s iWatch is clearly and unequivocally better than every other wearable that a consumer could possibly consider purchasing.

While Cohan’s math is aimed at debunking analysts’ claims that the iWatch could bring Apple $9 billion in revenue, it makes it clear how important it will be for Apple that the iWatch not only overcomes the challenges and failings of early wearables, but also opens up the wearable device market to consumers who wouldn’t have considered a smartwatch until they see an iWatch commercial and become convinced that it offers clear value to them.

To quickly gain market share, the iWatch will need to be demonstrably different from all of the other products on the market — some of which are very popular, as wearables go. For the iWatch to be a success, Apple will need to introduce the iWatch as a mainstream product and leverage its influence to expand the wearables market. The existing wearable market may not yet be large enough for the iWatch to meet the great success that past Apple innovations like the iPod or iPhone did.

Getting the iWatch right is a high-stakes process for Apple, which will ultimately need to live up to customers’ expectations that Apple will perfect and define each new product category that it enters. That’s the strategy on which Apple’s past successes have been built, and the iWatch, whenever it’s launched, will need to combine intuitive and useful functionality with attractive and practical design in order to get customers who haven’t yet wanted a smartwatch to see the iWatch as essential.

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