Quick Take on Disruptive Potential of Smartwatches

Just a few quick notes on the disruptive potential of smartwatches.

Smartwatches will not be disruptive to watches

This is very important. This tells you who will be the main players in the smartwatch market in the mid- to long-term. Smartwatches add features to traditional watches, and will often be more expensive than comparably built watches. Therefore, it makes perfect financial sense for incumbent watch makers like Seiko, Citizen, Swatch, Tag Heuer, Casio, and others to make a smartwatch. We are already witnessing this. If incumbents are motivated to fight back, the probability of an entrant being successful is greatly diminished.

Whether the incumbents (traditional watchmakers) can succeed in making a good smartwatch is another question, but given that the operating system is already freely available as Android Wear, and that the Shenzhen ecosystem should give them the electronic components that they need, it is likely that despite not having prior excellence in electronics, incumbent watch manufacturers will be able to create smartwatches that are almost as good as the ones coming out of Samsung, LG, Motorola, etc. Since brand and design are very important for selling wearables and that there is no easy way for entrants (smartphone OEMS) to acquire a strong brand image (i.e. they don’t sell strong brand images in Shenzhen), it is likely that the incumbents (traditional watchmakers) will prevail in the smartwatch space.

Smartwatches will be disruptive to smartphones

Instead of being disruptive to watches, smartwatches will be disruptive to smartphones. Smartwatches will make many of the smartphone computing tasks more convenient and easier to accomplish. Although their current functionality is rather limited, it is very likely that advances and innovations in both hardware and software will quickly expand the scope of tasks that we can accomplish with smartwatches.

For the most part, this will be a new-market disruption as opposed to a low-end disruption. In low-end disruption, you would typically target the least demanding customers. However, in the current format, smartwatches will depend on the user also having a smartphone nearby. A typical user will need both a smartphone and a smartwatch, so they will not be the least demanding customer.

Instead, smartwatches will be new-market disruptions. They will enable customers to interact with computers and the Internet in ways that were previously impossible or cumbersome.

Now in the previous section, I argued that traditional watchmakers will prevail in the smartwatch market. They will gain share of the total compute time per user. The question then is, who will lose share? Who will be disrupted by this new market disruption? My argument is that here the incumbents are smartphones and that smartphones will be disrupted by smartwatches.

Without going into detail, this is what I expect the smartwatch landscape to look like after the dust has settled;

  1. Apple will be the undisputed number 1. They will aggressively innovate on the Apple Watch, even to the extent that it cannibalises the iPhone. The Apple Watch will gradually become more and more independent of the iPhone.
  2. The current Android smartphone OEMs will initially play in the smartwatch market, but they will fail to make profits due to their lack of brand power. Eventually most will retreat from the smartwatch market and focus on making big and powerful smartphones. The few that remain will only get the scraps from the very low-end of the market. The exception might be Samsung. If their Tizen operating system enables them to innovate faster than Android Wear, there is the possibility that Samsung will be able to profit from smartwatches (due to the lock-in they get).
  3. Current watchmakers will be the major Android Wear players in the smartwatch space, especially in profits. The electronics will be provided by the Shenzhen ecosystem or a chipset provider (maybe Intel). Depending on how well Google can monetise from Android Wear, we might see some rapid innovation.
  4. Smartwatches in general will become more and more independent of smartphones. Ultimately, people may not carry a smartphone but instead carry a MiFi-like cellular connection device paired to their smartwatch (due to the battery requirements of connecting to a cellular network). For tasks requiring a larger screen, customers might carry a tablet-like device. The theme here is that smartphones will be at least partially replaced by smartwatches.

Final thoughts

Clayton Christensen famously misunderstood the disruptive potential of the iPhone. He saw it as a sustaining innovation to feature phones, and expected the incumbents to quickly respond and shut out the new entrant (Apple). Part of his mistake is that he failed to see how the iPhone would be a new-market disruption, making PC tasks possible on a mobile device.

We should be careful not to repeat his mistake. We need to be careful in understanding to which markets smartwatches are sustaining, and to which markets smartwatches are disruptive. If we fail to correctly assess this, we will end up with the opposite prediction.

Here I make the potentially controversial prediction that the traditional watchmakers will prevail and that smartphone OEMs like Samsung, Motorola and LG will drop out of the market. This will be the measure by which my understanding of disruption theory should be judged.

Update

Since many people will understandably have an issue with smartwatches disrupting smartphones, I think I should go into a bit more detail. Instead of going into logic, I will give my understanding of what happened when the iPhone entered the market (Christensen’s mistake) and examine the parallels with the Apple Watch.

  1. Smartphones did not disrupt the mobile phone market: Many people think that the iPhone disrupted the mobile phone market. Disruption means that new entrants successfully displaced the incumbents. While this is certainly true that one entrant, Apple, gained 8.4% market share of total mobile phones, if you look at the other players, the mobile phone market is still mostly comprised of incumbent companies that used to sell feature phones. These companies were fortunate that Google provided Android for free, so that they could easily and quickly develop their own smartphones. Some may note that Blackberry and Palm almost completely disappeared. I would argue that if you look at the total mobile phone market, they were never more than a small niche so they weren’t really incumbents at all. As for Nokia, they simply bet the company on the wrong horse. If they had chosen to use Android, there is little doubt that they would have still been a force to reckon with.
  2. Smartphones disrupted PCs: To understand this, you have to lump smartphones and PCs together to create a “personal compute market”. Ben Bajarin has done this, and the following chart shows what has happened. PCs have clearly been overrun, and importantly, neither Microsoft itself nor any of the PC OEMs (with the exception of Lenovo which is very agile at M&A) successfully made the transition to smartphones. This is what disruption looks like.
    Ben BajarinさんはTwitterを使っています Microsoft s journey of computing platform share through the years http t co taFsFr1sZp

Now if we apply this to the current smartwatch situation, we can expect the situation I described in 1) to happen to the current watchmakers, and the situation I described in 2) to happen to the current smartphone OEMs.

So for current watchmakers, they will quickly adopt the new emerging technology, and the freely available Android Wear will help them immensely. The Shenzhen ecosystem will also help on the hardware side.

On the other hand, smartphone OEMs will dabble in smartwatches in the same way that DELL and others briefly entered the smartphone market (Dell Streak 5, HP iPaq). Notice the bulkiness and inelegance of their offerings, which reminds me of the bulky and unfashionable Android Wear devices that we are currently seeing from Smartphone OEMs.

In a few years time though, I predict that smartphone OEMs will mostly exit from smartwatches, just like DELL and HP did. There seems to be something that holds back incumbents in the higher spectrum of the market from creating something that is simpler and more elegant.

Apple Watch Pricing Revisited

Following a tweet that I read yesterday, I’ll give an update on my thoughts (1, 2) on the price of the Apple Watch.

Abdel IbrahimさんはTwitterを使っています gruber Touché I say that because so far every girl I ve asked would like Edition but when I suggest at least 2K they re turned off

Full thread on twitter

Abdel’s point is very valid, and I think its something that Apple has deeply thought about. The thing is, and I mentioned this before, unlike watches in general, the Apple Watch will live and die by its ecosystem. Apple has to ensure that the ecosystem will be vibrant and profitable for developers, and the way to do that is to maximize the number of users who are willing to spend a dollar or so for an app. If the price of the Edition is so high and the design of the Watch not appealing enough for women, then the Apple Watch as a whole may not attract enough female users.

I’m certain that this is not what Apple wants, and they would push hard to make the Edition affordable, at least for the majority of women in developed countries.

Then the question is, how low can Apple possibly go?

This depends on how much gold is used in the watch. In my first article, I quoted a teardown of a Rolex gold watch;

  1. Case ring weights 18.5 grams. Contains 13.875 grams of pure gold. It has a value of $178.43.
  2. Case back weighs 7.21 grams. Contains 5.41 grams of pure gold. It has a value of $69.57.
  3. Bezel weighs 5.30 grams. Contains 3.98 grams of pure gold. It has a value of $51.18.
  4. The bracelet weighs 68.85 grams. Contains 51.64 grams of pure gold. It has the most value at $664.09.
  5. The total value of the pure 24kt. gold in this Rolex President is $963.27.

There’s actually a better page here which shows you what each part looks like.

NewImage

Comparing the Rolex watch to the Apple Watch, we can see that the Apple Watch does not have a gold case back or bracelet or a bezel to hold the glass in place; it only has the case ring. Also, although hard to be certain from just the photos, it’s likely that the gold in the case ring is also much less than a Rolex because the face of an Apple Watch is almost entirely the screen

It looks like the Apple Watch would only use a very small fraction of the gold in a Rolex. I suspect that Apple is purposely using as little gold as they can without sacrificing the design, which is in direct opposition to the Rolex which is trying to stuff in as much gold as possible. I would guess that Apple is only using at maximum, 15 grams. Maybe much less. The fact that people who actually wore the watch found it to be very light, might be a hint in this direction.

This would suggest that, at today’s gold prices (~40,000 USD/kg), the price of using gold will be something like 600 USD. Therefore, I think that it’s quite possible that Apple could make the Edition less than 1,500 USD.

I actually expect Apple to try even harder to further reduce prices because I think that it is a strategic imperative.

Apple’s Public Relations Push For the Apple Watch

I have mentioned in this blog that we can expect a very strong public relations and marketing push from Apple in order to jump start the sales of the Apple Watch.

In my first post on the Apple Watch (14th, Sept.) I said;

The question should simply be, “what is Apple’s initial marketing push going to be based on?”. “Does Apple have a good strategy for that push?”

From what I’ve seen, Apple’s initial marketing strategy is plainly obvious. It is going to be based less on technical or functional merits and more on the fashion aspect. It will be about creating brand awareness. It will be about creating a buzz, not necessarily in the Internet community, but in the more conventional media. This is probably based on the realization that explaining the functional merits of the Apple Watch is going to take time to win the general public, too much time to sustain the excitement of developers.

Well, from what we’ve seen, the conventional media is making quite a buzz. So much so that it will make an editorial debut on Vogue China. This suggests that for Apple, their PR strategy is going according to plan.

Of course, Apple has been doing quite a lot of PR work even after the September 9th unveiling event at the Flint Center. In particular, Johnny Ive has been taking quite a few interviews with the fashion media. We are clearly seeing Apple focus on PR towards the fashion media pre-launch and this seems to be generating the desired results.

If my guess at Apple’s strategy is correct, Apple should also be working quite hard with major developers to ensure that a large number of apps would be available at launch. This of course will be less public.

Cover-Nov-2014-for-meng-700x902[1]

Apple Watch Pricing Strategy Thoughts

There has been speculation that the price of the 18K gold Apple Watches may be several thousands of dollars higher than the stainless steel versions. John Gruber has written a blog post on how he came to this guess. John Gruber guesses that the 18K Apple Watch Edition will start from $4,999.

To arrive at this number, John Gruber analysed the prices of 18K gold Rolex watches. He found that they are priced at over $30,000 and so in fact, the $4,999 figure that he arrives at is much much lower that luxury Swiss watches. I think he was trying to find a sweet spot between luxury Swiss watches and the price of current Apple products.

This is definitely one pricing strategy that Apple may follow.

However, pricing is a very very difficult topic. There is no single correct pricing strategy. In fact, as you can see on Wikipedia, there are many pricing strategies that are in use (and this article only lists the general ones). John Gruber’s analysis is absolutely correct, but only if Apple’s pricing strategy is “Market-oriented pricing”.

Let’s see what would happen if Apple chose to use a different pricing strategy.

Cost-based pricing

This is the practice of basing the price on the cost-of-goods. In the Wikipedia article, strategies like Absorption pricing and Contribution margin-based pricing are cost-based price strategies.

If Apple were to follow this strategy, the price differential of a stainless steel/sapphire glass Apple Watch and a 18K gold/sapphire glass Apple Watch Edition would be roughly equal to the cost differential of stainless steel and 18K gold.

What would this price be? What is the cost different between stainless steel and 18K gold?

To understand this, we need to know how much 18K gold is contained in an Apple Watch. We don’t know the answer to this, but I found an article on the Internet that measured how much gold was used in an 18K gold Rolex watch. This will give us a rough idea of how much gold may be used in an Apple Watch Edition.

“How Much Gold Is Really In A Rolex Watch?”

NewImage

This article tears down a Men’s Rolex President (photo) to find how much gold is used. The results are as follows;

Case ring weights 18.5 grams. Contains 13.875 grams of pure gold. It has a value of $178.43.

Case back weighs 7.21 grams. Contains 5.41 grams of pure gold. It has a value of $69.57.

Bezel weighs 5.30 grams. Contains 3.98 grams of pure gold. It has a value of $51.18.

The bracelet weighs 68.85 grams. Contains 51.64 grams of pure gold. It has the most value at $664.09.

The total value of the pure 24kt. gold in this Rolex President is $963.27.

Since the Apple Watch Edition does not come with a solid gold bracelet, the total value of the pure 24kt. gold in watch would be

$963.27 - $664.09 = $299.18

That’s actually not very much.

Furthermore, the case back of the Apple Watch Edition does not have much gold because the heart rate sensor takes up a lot of space. For the Apple Watch Edition, I would estimate something like $230.

Gold prices have risen very significantly (2-3 times) since this teardown article was written in 2006 (probably due to the excessive quantitative easing by the Fed in response to the global financial crisis), so we might actually be looking at a total value of something like $500 – $1,000.

This suggests that if Apple follows a pure cost-based pricing strategy, the price difference between an Apple Watch (stainless steel) and an Apple Watch Edition (18K gold) will only be about $1,000 at maximum.

Developers

In PCs, smartphones and the Apple Watch, developers play a very important role. This is likely to strongly affect any pricing decisions that Apple will make.

To understand this, take a look at the video of Steve Jobs and Bill Gates at All Things D5 from (15:52). They talk about their collaboration on the original Macintosh on which, not only Apple but Microsoft had bet their future on. Bill Gates mentions that when Steve first came, he had mentioned that the price of the Mac would be much lower than it eventually turned out to be at $2,495. In fact, Steve Jobs fought for the Mac to be prices $500 lower, but lost out to John Sculley.

Why would Steve aim for low price? Because a low price would mean more units would sell, which would mean that Microsoft and other software developers would be able to sell more software and make more money. This would invite more and more developers to write software for the Mac and create a vibrant and healthy ecosystem.

Coming back to the Apple Watch, Apple has to entice developers to write software for it. They have to create a vibrant ecosystem around the watch. This means that they need to sell a lot of units. Maybe not as many as iPhones or iPads, but at least enough to make developers excited about it.

Keep in mind that while Apple may rake in a lot of money from a luxury watch, app developers will not be able to charge a premium for wealthy customers. A billionaire and a person on the street both pay the same few dollars for the very same app.

A luxury watch that will cost more than $4,999 and will only sell to a relatively small number of wealthy customers will not contribute much to the ecosystem.

Tentative conclusion

My guess is that Apple will price the Apple Watch Edition 18K gold models using a cost-based pricing strategy. That is to say that the price difference between the stainless steel model and the 18K gold model will be between $500 to $1,000 at current raw gold prices.

The basis of my guess is that Apple does not have to employ the same pricing strategy as the Swiss luxury watch makers. In fact, doing so will harm the developer ecosystem that Apple wants to build up.

The priority for Apple should not be about maximizing short-term profit. It should be about selling large numbers of watches and building the ecosystem for long-term gain. And I’m sure that Apple is fully aware of this because of the near-fatal mistakes during the Sculley, Gassee years.

Update

  • I reduced the cost analysis for the Apple Watch Edition after realizing that the back case doesn’t use gold.
  • I have written some further thoughts on this topic.

Apple Watch Strategy

The introduction of the Apple Watch at the Flint Center at Sept. 9th was both similar and different from past product announcements. Some have seem this as a weakness or change within Apple. I see it however as simply a realization and adaptation of the unique challenges Apple faces, as it enters a product category that has been an extremely obvious target, but has proved elusive for both Google and Samsung.

Fashion

Fashion was very much emphasized at the event. In particular, many fashion journalists were invited to the Flint Center to attend the event. You can also see this in the way they introduced the Apple Watch. They almost immediately went to Jony Ive’s video which, as always, focused a lot on the design aspects of the product.

Rather than make the fashion journalists bored stiff with technical details or what features the watch can perform, they went straight to the appearance and feel of the product.

This clearly shows that Apple has placed a very high emphasis on fashion, probably because they hope that will be a strong driver of sales.

Although Apple is a very, very strong brand, its ability to attract fashion conscious customers and to get the distribution channels to behave according to Apple’s wishes is untested. This will be a very large challenge for them.

Developers

The description of product features was done by Kevin Lynch, former Adobe CTO and current vice president of technology at Apple. It was very extensive and they demoed a lot of applications. At the end of Kevin’s talk, he also went into WatchKit, the API for notifications.

Some say that this description lacked focus. That they simply showed a lot of apps without a clear message of what the the unique purpose of Apple Watch was. It is true that the positioning of Kevin’s talk was unusual since it actually preceded Tim Cook’s description of the three pillar features.

The most rational way to think about this is that Apple was showing off what the Apple Watch was capable of, as a way to excite third party developers to create new and exciting apps. That is, the emphasis of Kevin’s talk was not about us but about developers.

Back when the iPhone was introduced, Apple had not prepared an SDK for third-party development, and the App Store had not even been invented. The power of third-party developers to extend and to bring value to the platform had not been fully realized. Fast forward to today, the situation is totally different. Apple recognizes that developers are vital and indeed the key to getting mass adoption of the Apple Watch. In fact, developers are more important than any focused marketing message that Apple may come up with.

Developers are much more important now. Apple obviously and correctly decided that instead of them dictating how the product should be used, they should just lay out all the stuff on the table and let the developers choose what they want to use. Of course Apple added some great features like the taptic engine and the heart rate monitor (which I think is much more capable than the tiny ones that are on Google Wear devices). I think however that Apple realizes that these will be most powerful when they are integrated into third-party apps which, for example, can combine them with social networks.

What this suggests is that Kevin Lynch’s presentation was very much directed to the developer community. Apple is probably counting on developers to expand the Apple Watch platform, and giving them the information that they need as early on as possible.

Mass Market Appeal

Another rather unusual thing that Apple did for the current introduction is that they fed the hype. For example, they let ABC News’ David Muir in backstage after the introduction for an exclusive interview, and naturally ABC News hyped it the previous day.

They also used very strong words like “historical” and Tim Cook has repeatedly mentioned that this event marks a turning point for Apple. The rational explanation for Apple itself fueling the hype engine is that Apple felt that it was important that as many people as possible knew about the Apple Watch on day one.

This suggests that instead of following the usual technology adoption life cycle (enthusiasts -> early adopters -> early majority -> late majority -> laggards) and initially target early adopters, Apple plans to jump start at the early majority.

In fact, that is kind of what happened to the iPad. The iPad didn’t have much of an early adopter phase and uptake was extremely rapid. The iPad may have taught Apple that at its current scale and market position, you don’t have to follow the classical “crossing the chasm” theme; you can take the whole market in a single gulp.

I’m not sure why Apple senses the need to attack the mass market from the beginning. Maybe it’s simply because it thinks it can. Maybe it’s to go so far ahead before Google has a chance to catch up. Maybe it’s related to the fashion push. Maybe it’s because they thing that the Apple Watch is a prerequisite to some other stuff that they have in preparation. I don’t know.

One thing is sure. If they want to keep this hype level as high as it is, it will be a huge challenge for even Apple.

Strategy

Instead of lambasting Apple because the presentation of the Apple Watch did not closely follow in the footsteps of Steve Jobs the Master, it is more constructive to try to understand why Apple chose to diverge from the well trodden path. Of course, this assumes that Tim Cook and his team of truly top-class executives know what they are doing, but that isn’t exactly a leap of faith.

Looking at the sequence and structure of the Apple Watch introduction as I have above, it is clearly obvious that Apple’s primary concern in the fashion aspect. And secondly, it’s about the developers. It’s about what developers will do with the graphics, the sensors and the taptic engine on the phone.

The features that Apple Watch may have outside of simply telling the time, the “reason to exist” as many critics have commented, are at this point only the third priority. That is clearly what the structure of the presentation tells us.

Judging from the presentation structure and sequence, that is Apple’s strategy for marketing the Apple Watch.

It was not a mistake. It was most likely very intentional.

Who Will Sell The Luxury Google Wear Device?

There are so many questions following Apple’s announcements on Tuesday Sept. 9th. A lot of these involve competitor reactions.

Here I would like to touch on who will sell the luxury Google Wear device?

We now know that Apple Watch is going to enter the luxury watch segment with its 18K gold bodies. What will the competition do?

Arguably the best candidate for a well designed and luxurious Google Wear device is the Moto 360 by Motorola (Lenovo). Unfortunately, the attention to detail did not seem to extend to the straps. It may be the most premium Google Wear device, but it clearly wasn’t designed with luxury in mind.

Then who will?

Will it be Samsung? They own the high-end segment of Android smartphones and are well positioned in that sense. The problem with Samsung is that it is hardly a luxury brand. Even the high-end smartphones that it ships have been constantly criticized for a cheap look-and-feel.

Will it be HTC? They have created some gorgeous looking smartphones, but as a brand, they are hardly luxury. The same can be said of LG.

Will it be Motorola? Well the Moto 360 was a nice try. The Moto X however has been a dismal failure.

I tend to think that no current Android smartphone maker is up to the task of creating a luxury watch. They simply don’t have the brand, and it’s very unlikely that they can achieve the detail to attention that is required.

It is more likely that some of the Swiss watch makers will team up with a tech company to deliver a smartwatch. It is very possible that the Apple Watch will eat into the luxury watch segment and steal customers away from the Swiss watch makers. To defend themselves, Swiss watch makers might enter smartwatches, and since the only platform they can use is Google Wear, that is what they will probably use.

I would hate to say “OK Google” to a Rolex watch though. That is so humiliating.

Sales Channel Strategy for Apple Watch

One thing that I am very interested in learning about is, what will be Apple’s marketing strategy for the Apple Watch?

Most of the discussion on the Internet has been about the product. After all, that is basically all that Apple has shown us thus far. However, to gain any serious idea of whether it will sell well or not, we have to understand at least the promotion, pricing and channel strategies.

Here, I would like to touch on some possible marketing strategies;

  1. It is very likely that Apple will extend the distribution channels for the Apple Watch to fashion and jewelry. These are obviously new channels for Apple, and it is unclear whether these channels will be very cooperative.
  2. Apple could possibly repeat the channel strategy that they forced on retailers after the introduction of the Bondi Blue iMac; that is, they might demand that jewelry shops treat the Apple Watch in a very special way with a dedicated display.
  3. Apple already has a very strong brand, but it is not yet associated with watches. It will be an uphill battle into which Apple is likely to dedicate a huge amount of resources. We can expect Apple to work with news outlets to increase media exposure of the Apple Watch, while Apple will also invest heavily in advertising.
  4. Jewelry outlets typically do not have to explain how the products work. Watches do not have many functions, and the functions that they do have not changed much in decades. The precious watches are typically displayed behind glass cases, and only when you ask the shopkeeper to open the lock, can you touch the device. This will not work for the Apple Watch. Customers will have to touch it and to test its wide variety of features to understand how it will suit their needs. There also needs to be a person who can explain it to them. It is very likely that the vast majority of jewelry outlets will not be up to this task. If this is the case, it is possible that Apple will severely restrict outlets and demand that they reserve dedicated space and staff for the Apple Watch.
  5. If getting jewelry outlets to carry the Apple Watch in a sufficient way turns out to be too difficult, then Apple might restrict retail to the Apple Store and online.

All in all, there are many challenges in the channel strategy. It would be ideal if Apple could get jewelry outlets onboard, but that could turn out to be very difficult. Advertising and promotion however should be more straightforward and we can expect a lot of that going forward.

Why the Apple Watch Exists

Following the introduction of the Apple Watch, many people have suggested that it still lacks a reason to exist. That the keynote lacked an explanation of what the purpose of an Apple Watch is. That it lacks a so called Killer App.

This is probably an extremely misleading way to think about how new product categories come to life and subsequently flourish. The idea that the inventors of a new product category have a good idea of how it will evolve and what needs it will fulfill is not supported by history. Apple executives have also repeatedly mentioned how the killer application came only after a product’s introduction, and how success has often been beyond their wildest dreams.

Take the iPhone for example. At the time of introduction, it was marketed as i) a great phone, ii) an iPod and iii) an Internet communicator. Fast forward to today and you find that i) people don’t use smartphones much as phones, ii) they don’t use them much as iPods, iii) they don’t spend time browsing the web very much. Instead they use smartphones predominantly for Facebook, messaging and taking photos/videos, with app money being mostly spent on games. We can also add video viewing. The killer app is nothing like the initial “reason to exist” that Apple presented.

Hence the fact that Apple didn’t convincingly present a “reason to exist” for the Apple Watch is only relevant for the initial marketing push. Although it will affect how strong the initial uptake will be, a “reason to exist” has no consequences for whether it will ultimately succeed long-term.

Therefore, I think that the question “why does it exist?” is completely the wrong question to be asking. That will be answered in the long term by products that may not even exist yet. In fact, when you come to think of it, the definition of a killer app itself almost precludes it from being known at the time of product introduction.

The question should simply be, “what is Apple’s initial marketing push going to be based on?”. “Does Apple have a good strategy for that push?”

From what I’ve seen, Apple’s initial marketing strategy is plainly obvious. It is going to be based less on technical or functional merits and more on the fashion aspect. It will be about creating brand awareness. It will be about creating a buzz, not necessarily in the Internet community, but in the more conventional media. This is probably based on the realization that explaining the functional merits of the Apple Watch is going to take time to win the general public, too much time to sustain the excitement of developers.

And that is why the “why does it exist?” of the Apple Watch, does not exist yet.

P.S.

All other attempts to create a popular smartwatch have failed to date. Interestingly, they have had a clearly communicated “reason to exist”, for what it’s worth.