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Apple Watch Series 2 offers glimpse of smartwatch future

Matt Hamblen | Sept. 13, 2016
Focuses on fitness, but there’s a long way to go to major smartwatch growth.

Patrick Moorhead, an analyst at Moor Insights & Strategy, is bullish on the latest Apple Watch innovations. If the new Apple Series 1 and 2 watches perform as well as demonstrated on stage, he predicted “sales will improve dramatically.” The next wave of smartwatch owners should increase the size of the total market by 10 times, a group he called the “early majority” instead of the “early adopters.”

Hyperbole with smartwatch sales

Other analysts were less bullish than Moorhead.

“It’s good that Apple is trying to reposition the Watch as a solution rather than a peripheral device [to a smartphone], but at its current $369 price point, it may have limited market appeal,” said Jack Gold, an analyst at J. Gold Associates. “I don’t see this will be a very high volume market for Apple.”

Gold said the price drop of the original Series 1 model to $269 would only make a difference in boosting sales if it had more features like those in the Series 2. Apple said Series 1 watches will have the same upgraded system-in-a-package (SiP) dual core processor and graphics processor as the Series 2 -- still not enough for Gold’s taste.

Ubrani said the smartwatch market is a “very, very small market and it will likely remain like that for a long time” even though there will be growth. Disagreeing politely with Moorhead, he said, “there certainly won’t be anything like a 10X improvement” in the next few years.

IDC has predicted 19.2 million smartwatches will ship this year, a tiny number when compared with the more than 1 billion smartphones that will be sold.

Future dreams

What seems to be driving much of the interest in the Apple Watch -- and the entire smartwatch market -- despite lower-than-expected initial sales, is a strong interest in where smartwatches and other wearables will eventually take us in the world of personal computing.

Could average people use a smartwatch in 20 years to replace a smartphone for video calls and to serve as a digital wallet, with the ability to pay for things? Can you carry a digital version of your driver’s license or identity card, with insurance and other information? With such a device, could normal workplace habits be changed? For example, could the smartwatch be used to open security doors through short-range wireless and help with passwords to log into highly secure behemoth computer systems?

Using the smartwatch as a person’s electronic wallet offers plenty of promise, according to Matthew Goldman, the chief product officer for Bankrate, a large provider of consumer financial advice and tools.

“People can pay more easily with a smartwatch that stays on the person,” Goldman said in an interview. “We talk to people with Apple Pay on their watch who say it’s much easier than using their phone. The phone isn’t that big of a differentiator from using a card in your wallet.”

 

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