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How will Apple Watch shape the industry?

Posted: 11 Feb 2015     Print Version  Bookmark and Share

Keywords:smart watch  Apple Watch  smartphone  NFC  wearables 

Apple is set to unveil its smart watch this year that uses built-in sensors to monitor the wearer's biometrics and connects via Bluetooth to the iPhone for Internet and telephony applications. According to the company, users can run a number of applications on the Apple Watch, such as making a phone call or responding to text messages, as well as asking Siri to display traffic conditions for the commute home or making NFC point-of-sale payments.

What does this mean for electronic engineers? For the rest of the supply chain? For the electronics industry? Is this the moment we've all been waiting for, when wearable tech is adopted by consumers worldwide, creating new demand for other wearable devices? Or is excitement around the Apple Watch a false indicator of consumer demand for wearables because of the unique place Apple occupies in the market?

Apple Watch

Apple Watch

Recent polls reveal a divided state of affairs for wearable technology: while nearly half of Americans claim to want more wearable devices, a third of those who have owned a wearable device stopped using it within the first six months. How can this contradiction be explained? One clue lies in the evolution and decline of one of the most popular categories of wearable technology: dedicated fitness trackers.

With their promise of making it fun to get in shape, dedicated devices from Fitbit, Jawbone and Nike FuelBand achieved significant success over the past two years, but signs now point to a decline in future growth. A major factor is the role of smartphone convergence: what need is there for a dedicated fitness device when there's already an app for that which will run right on your phone? Just as the inclusion of GPS in smartphones killed the market for dedicated GPS devices, the expanding feature set of contemporary smart phones is now rendering dedicated fitness trackers obsolete.

With this in mind, Apple is ahead of the game by making a watch that is essentially a nice-looking peripheral for the iPhone. Remember, the Apple Watch needs to be tethered to a compatible iPhone or it cannot deliver any of its promised functionality. With more than 300 million iPhone users worldwide, it has a huge addressable market of Apple Watch users. And that only takes current iPhone users into account, who knows how many more consumers will switch to the iPhone from other platforms because of the Apple Watch?

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