How Apple Watch will create new winners and losers in the wearables ecosystem
Apple released news about their new Apple Watch today and overall I have to say I’m fairly impressed.
In the smart watch category, there are a couple of key things that have to be handled in order to secure a large total addressable market and these have been major failings of every other entrant.
- watch designs are personal
- watches need different watch face sizes
- they get used in all environments from fancy to sweaty
- they have a long history that you can’t ignore
Apple managed to navigate the first four of those points by building 6 different cases, 2 different face sizes, 6 watch bands (12 if you consider the two sizes) and then a plethora of watch faces. While this could get out of control from a supply chain perspective, they constrained that problem set by clustering. For example, the sport bands clustered with the high durability aluminum cases that have the hardened alumina-silicate crystal. The net result? Watches for any person of any size or any sex that make them feel “unique”. This is a massive supply chain issue that only a major watch supplier….or Apple with its core competence…could have orchestrated.
All of the above helps Apple do one key thing: increase their total addressable market. When they can sell to anybody, any sex, with any suitable fashion combo, now they can aim at all segments at once. While this is the kiss of death for an undercapitalized company, this is the right play for a company with as much cash on hand as Apple has. This is a land grab to all customers of all ages and as many segments as they can reach in as many countries as they can get to. Segment-wise this means everything on the spectrum that is in green (although they’ll miss a small chunk at the extreme end).
- X Hospital grade medical
- √ Consumer Medical
- √ Lifestylers / Move Mores
- √ Couch to 5K crowd
- √ Beginner to advanced runners, cyclists, and other non-water sport athletes
- X Triathletes and other water-sport athletes
- X Industrial athletes
- X Adventure Athletes / Backcountry athletes / Ultrarunners
- X Military Athletes
Admittedly I’m making an assumption here about the waterproofness of the watch. Waterproofing devices like this is very very hard and very expensive. It automatically adds another $50-100 to the watch retail price. My bet is IPX7, although Apple has not divulged anything. They did mention a “water-resistant” speaker which doesn’t bode well. It may not even manage to hit IPX7 which would be a shame.
So where does it fit into the ecosystem and what does it potentially threaten (or augment?). I’ve overlaid the iPhone 6 / Apple Watch / Apple Fitness App / Apple Workout App on top of my market map to show where it plays. Essentially it overlaps the existing (vast) Apple fitness application ecosystem but I think it augments them more than threatens them. It also basically wipes out the dedicated 3d accelerometer trackers like Nike Fuel Band. And so now we finally see why Nike killed that piece of hardware. They obviously had advance notice of what was in the pipeline from their long-standing partnership with Apple in the fitness space. So we have:
- Winners: fitness app users who get a great piece of hardware to extend their app to.
- Losers: Fitbit, Jawbone, Garmin, Polar, Timex, Casio, Pebble.
Wearable Device Market Map 5.0
I for one can’t to get my hands on one to test and beat up. As soon as I do I’ll put it through the usual stress tests and let everybody know what I think about its durability.