3 essential elements for Apple’s iWatch success

“With the Samsung and Qualcomm watches officially unveiled, the elephant in the room is now Apple,” Jason Schwarz writes for TheStreet.

“Samsung’s attempt at a watch is destined to fail because it lacks a ‘must have’ application that differentiates it from a smartphone,” Schwarz writes. “It won’t be easy to find a target market willing to pay $299 for mirrored functionality between the two devices. Apple will experience a similar fate if it chooses a similar approach to the iWatch.”

Schwarz writes, “To our knowledge, there has never been a watch that sold more than a few million units in a quarter. Apple needs to grow this new product category into 20 million units per quarter if it hopes to move the needle. If Tim Cook and company are serious about creating a viable new product category, then the following three elements are essential:”

1. iWatch should do something that iPhone doesn’t do.
2. iWatch should do something that that is enhanced by the wrist security.
3. iWatch should have so much high tech built into it that the product costs $400 or more and is sold with a subsidy.

Schwarz writes, “Without these three elements, the iWatch is at risk of becoming a negative catalyst for the stock.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]

47 Comments

  1. Let me put it this way. For all the whiners on here complaining about not wanting a bigger than 3.5″ iPhone screen, here’s a solution for you.

    Wear it on your wrist like an iWatch and let those of us who want a 4.8″ iPhone get on with life. Or wear it on your forehead with a Nike headband like the mark of Cain. I don’t care.

      1. REX
        Ballmer’s left nut is some troll with half a brain and only 1 nut – he loves getting reactions like this and lives in a dark hole with no life. so just enjoy his stupidity and let all show some sympathy… for he has lost his way.

        1. no – I agree to some degree with BLN.

          I see a solution for Apple customers in a different way.
          I agree there is a number of people who want larger phone screens. He is right. And he is one also. I am another. Apple should and could do something very simple.

          Offer iPhone in the three screen sizes it produces now.
          and simplify its line at the same time providing clarity of products too.

          SMALL 4.0″ / MEDIUM 7.9″ / LARGE 9.7″ — iPHONES
          true cellular network ability and 4G LTE calling functionality in each size. A bluetooth ear plug could be provided as a solution for the Phablet issue to head joke.

          SMALL 4.0″ / MEDIUM 7.9″ / LARGE 9.7″ — iPADS
          no cellular network – wifi only – this defines the tablet compared to the phone.

          I see the iWatch as something useless so far. Or a SIMPLER SAMRT PHONE without the need for a screen at all. TOTALLY interface with Siri – time / calling contacts / music location and directions — everything controlled or functioned by Siri. TIny screen fine or none.

          1. do i want a tiny screen iWatch cell phone attached to my wrist ?

            – no – i don’t like wearing my regular watch now – it gets in the way working on my computer desk – the time is on my computer and phone – what function is this device going to offer to revolutionize my life such that i would need it? I can call people back once i get the notification on my phone… iWatch would need to project the screen of my iPad but even that would be stupid – i will wait and see

  2. There is an essential element not only for Apple’s iWatch success but for all their products that needs to be avoided at all costs.

    That element to be avoided is any consideration, direction, or suggestions of what an analyst, jouranalist or Anustralian says in the mainstream media.

      1. You are absolutely right, everyone has a right to their opinion, just as everyone has a right to ignore it.

        I certainly wasn’t suggesting for them to stop their drivel, it’s up to them to decided if they want to better humanity by being silent.

  3. A subsidy? And presumably a contract? On a watch? I own many Apple products, but I will not enter into a contract for a watch.

    But I will add one additional critical success factor to your list — a battery that lasts more than a day — unless I can simply lay it on a recharging pad, meaning no plug in. I think some consumers would even reject that.

    Seriously, I like the idea of a smart watch. But it has to make sense both functionally and economically.

    1. 10 hour battery life is a constant goal and engineering challenge for Apple – and they pride themselves on it.

      An advancement in solar charging this iWatch would be greatly needed. Or the use of tiny fuel cells. Something crazy to power and let Apple capitalize on new innovations to pass on down to other products later on. An iWatch could do everything iOS does on iPhone. But, YES power is the most important point for this item. And a high price tag would be beneficial at first to enable success for this product in effect leading to translating the benefits to the other products – if successful and cost come down.

      1. The cost of new and radical technology is the only way #3 is going to come about.

        People would only pay a big price on a watch that is from Apple… ONLY if Apple provides a revolutionary consumer fuel cell or entirely new solar collection system to power this tiny device. The benefit will be passed down to other devices if in fact sales are good and product costs are effective. Otherwise Apple needs to sell low and populate the consumers with a product that just is so needed for some reason.

        I can not see #1 happening. iOS does what it does yet by definition, a product that is a watch must do the basic clock then. iPhone has a clock. So #1 is redundant. Unless the watch projects the screen of iPhone for presentations? OR has 3D holographic something. #2, why does a watch need to enhance anyones security? Kids and locating them is a great idea, then this device is for them. And might play educational games too. Not seeing this happening.

        Number 3 is more likely. And more like Apple to push its innovation and gain profits on the risk it takes to gain production to other areas of future products. Apple selling a few hundred thousand watches that run fuel cells might see the light one day that those cells are placed into a Phone.

        1. iPod touch, was essential to spread the invested costs for touch screens.. as Apple offered the iPhone at high premium prices – the sales of iPod touch has always been important – the same screen size – same component – this keeps volume up – orders up and balances the investment. An like flexible screens or fuel cell coming to market — would pave the way for placing its profits into other products. Like putting fuel cells into iPhone later if successful. A big – but – calculated risk.

    2. Possibly a subsidy from Apple – ie the device costs $250 to make (so should sell for $400) but they charge $200 to sell bulk loads of them to strengthen the iOS ecosystem and bring back those who were fooled into roids.

      Threes a number of ways they could go with it – but if they make one, everyone will want one.

  4. Not sure about number 3. it would have to be a phone plus alot more. I think $199 is the right price point.
    Design appeal
    Usability/functionality
    Work with phone or standalone in a more limited way.

    I think the biggest problem is design and scale for men or women.
    Women don’t want to wear a mans sized watch and men don’t want to wear a smaller women sized watch.
    The clasp bracelet concepts are neat looking, but look uncomfortable for men especially, but there is more real estate. I can see doctors and specialized work related scenarios wearing this at work to keep hands free, but it must be comfortable and easy to get on and off.
    Just my two sense! (pun intended)

      1. I should clarify. Not the second half of #3 about the high cost.
        It’s really not so much about the “high tech”of the device, more about the intelligence being used to design it’s “purpose”.
        The other guy’s thinking: “Duh, lets make it tell time and mirror some functionality.”
        Apple: “You’re gonna feel like you just stepped through the door onto Fhloston Paradise, and go WOW.” 🙂

  5. Oh please Apple do not fall for this baby-boomer-Dick-Tracey driven watch B.S. This will be in the attic next to the Apple Hi-Fi 6 months after it is released. The phone is the form factor for communication, the iPad mini is the form factor for the PDA , and the iPad for light mobile computing.
    Now a watch that is a peripheral to seamlessly tie the other devices together ( and to iCloud too) that might me worth something.

  6. Wow, 400 hundred dollar watch with a subsidy! Super high tech? What?! Jason, let Apple do what they do best and make analyst, like you, look stupid on a day to day basis. In addition, “TheStreet’s” pavement has ended a long, long time ago Jason.

    1. How about $2500? Or $4,000, or $10,000?

      I paid $2200 for my Tag. $7K for my Cartier. I wanted a PP, but it was $60K. Had to pass. The Omega I like is $22K

      If Apple wants to make something in this market, and could be deemed an elegant time piece, then these are the prices.

      If it’s $199, well, Timex makes a piece. Or go to Walmart for the $39.95 special.

      The point is: for a watch, there is no justification for anyone to complain about the price. No matter what it is… If it’s crap…it’s crap. I doubt we would get crap from Apple..again. We’ll see.

      1. Apple make top quality products, but I’ve never seen them as a truly luxury brand. Even companies like Cartier make lots of different designs so people have a choice, that variation and the resulting smaller numbers sold goes some way to explaining the price. Apple will likely make a handful of models/colours. Are Apple really going to bother with selling watches that will sell in volumes of thousands?

        Apple will no doubt make a beautiful design, but when buying an expensive watch you’re to an extent buying it more as a piece of jewellery than just something to tell the time.

      2. This is a very interesting view point that I hadn’t considered. But I doubt apple is as worried about pleasing luxury watch buyers as they are with the average “techie”, who isn’t going to pay that much for a device.

      3. too rich for me…
        i am extremely happy with my SWATCH at 350.00
        and sadly i rarely wear it unless I am out on a special occasion just to have something on my wrist… to
        place Apple in that category – I don’t think so…

        Apple is about software and hardware for computing purposes – so a 22k watch that very few will buy – sorry no way – Apple Inc. is a consumer driven company now, not to compete with elite jewellery companies – i do not agree or see your vision

        however, what i do agree with – is, high price should not be complained – specially if technologically Apple presses forward with something important to transcend into other products – example power consumption going fuel cells or solar power that is so radical… that later the iPad and iPhone could adopt the same technology… so the initial premium is a well calculated risk for Apple

      4. Those watches are absurdly overpriced so the people that wear them can brag, and no offence meant to you. Please justify why any watch anywhere should cost over $1000 or even $500 in this day and age. Aside from it being diamond studded and/or the cost of the materials. What justifies that crazy price ?? I’d love to see the manufacturing BOM costs for those watches so we can know the crazy margins they’re making.

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