Reuters Thinks the Apple Watch is Doomed Because Only 25% of a Survey Group Would Buy One
Many journalists enjoy taking potshots at Apple (it’s a lot of fun, trust me) but I think Reuters' last attempt could have used better aim.
On Friday Reuters reported that:
Apple Inc’s new smartwatch may be a tough sell, with 69 percent of Americans indicating they are not interested in buying the gadget, according to a Reuters/Ipsos poll.
However, the survey also showed limited awareness of the watch. The poll was taken after Apple Chief Executive Tim Cook rolled out the product on Monday, and only about half of respondents said they had heard news of the timepiece in the last few days.
Apple overcame skepticism about the iPad and iPod when they first debuted, but the survey suggests that the world’s largest technology company has work to do to make the watch ubiquitous.
The survey also found that 52% of respondents felt that smartwatches were a passing fad. I happen to agree with that, but the most important detail was that 25% of respondents are thinking about buying an Apple Watch.
Think about that for a second.
Half of the survey group hadn’t heard of the Apple Watch until this week, and 25% of said group were interested in buying one.
And Reuters thinks that is a hard sell? Really?
I would say that this is a better description:
I know that’s an old Apple joke, but it’s still funny because it’s still true.
Apple is just about the only company which could release a $17,000 smartwatch and not be laughed into oblivion. Oh, I’m going to point my finger and make fun, but even while I am cracking jokes I will remember that Apple is going to sell more Apple Watches than anyone would reasonably expect.
The Apple Watch could even hit the craziest of the analysts' predictions:
Apple will launch the Apple Watch next year, and the company is expected to sell anywhere from 30 million to 40 million smartwatches in its first 12 months of availability, according to a report citing orders Apple may have placed with suppliers. But 30 million Apple Watches in a year might be a “conservative” number, Morgan Stanley analyst Katy Huberty said in a recent note to investors.
I still think that is madness, but it’s not entirely impossible. If Apple can convince even 10% of iPhone owners to shell out $350 for an Apple Watch then Apple could actually sell 30 million smartwatches in the first year.
But even if Apple doesn’t sell 30 million smartwatches, if for example they sell only 3 million Apple Watches, that’s still more units than any other smartwatch maker managed to sell last year.
And Reuters thinks this is a hard sell?
The only hard sell I see here is Reuters' argument that the Apple Watch is doomed.
jjj March 16, 2015 um 12:48 pm
Actually Apple gets laughed into oblivion for a 349$ watch , just not in the Apple press.
Anyway, 30-40 mil is very optimistic and would be doable at 119-129$ not at 349 and up.
The goal is to sell one to everybody and this is not that. Apple makes few products so they need to reach high volumes if they are gonna invest resources in something.
At some point every watch will be smart, one way or another , what’s uncertain is how many of us will wear a watch.
You also have to remember that most Americans pay 199 or less for an iphone, so 349 and up might be a harder sell than you imagine. Seen the ipad mini gen 2 (high res and decent SoC) at 249$ today at Staples, paying a lot more for a watch (a horrible one i might add) might not make sense even to most irrational consumers.
On a global level , smartphone ASP must be at some 300$ now and declining fast so 200-400$ watches are just not gonna fly.
I’ll add some info i had a hard time finding and that obviously gets ignored by the press since it goes against their advertising interests.
According to IHS , Moto 360 total cost (direct materials and manufacturing): is 65.77$ and for the LG G Watch ( the square one) it’s 52.40$. This includes the box content, the charging dock and w/e is in there. And do note that these early devices use some smartphone parts that push costs a bit higher and screens seem a bit overpriced for now but if the segment takes off , costs will drop plenty. Not enough details so far about the Apple Watch hardware but the cheapest version likely costs some 50$ more or less ( no stainless steel, no sapphire, a tiny screen with average ppi, plastic bracelet).
Prices with current hardware will need to go bellow 100$ for anyone that’s not Apple. Even 100$ will be a tough sell outside developed markets given the current products.
Nate Hoffelder March 16, 2015 um 1:23 pm
Actually, my biggest issue with the Apple Watch and smartwatches in general is that I know of far too many people who had a watch and gave it up when they got a smartphone. I just have trouble believing that people would start wearing watches again.
But so many people are absolutely certain that I am wrong, that smartwatches will be huge, that I begin to doubt myself.
jjj March 16, 2015 um 2:10 pm
My view of it is that one should focus on 4 pillars – fitness/health , alerts/messaging , payment and remote control. You can find some more but this would be good enough for now.
On the hardware side i don’t agree with the watch form factor but not going into that.
For the 4 pillars of functionality alerts is convenient enough, payment is more convenient than on phones since you save a few gestures and it’s harder to lose the device, remote control for computing devices, smart home and so on is again convenient because you don’t have to take the phone out. Fitness/health is either a small niche or a must have, depending on how good it gets. Right now it’s niche but if someone makes a life saving sensor ,the device becomes a must.
So a wrist worn device can have enough functionality to appeal at the right price and ultimately it will be worth including all or some in most watches. I wouldn’t mind using a watch to turn the AC on , see who’s at the door or pay for the cable car while skiing but not gonna consider a buy before we get better products at better prices. I gave up on watches some 10 years ago but if bands/watches can offer enough functionality at a reasonable price , i got no reason not to use one. They are limited but that’s not a deal breaker, i don’t think of watches as a computing device.
When glasses arrive in a real way they might kill watches or they could be both a watch and glasses somewhere down the road. Remains to be seen how long it takes for watches and glasses to become relevant.
My hope is that some big China brand makes a device that is not horrible and well priced , or maybe Logitech makes something focused on remote control since they are the leader in universal remotes. Sadly i am not sure Logitech has the courage to do it and i doubt they would price it well. Logitech has this mentality of being the dog under the table waiting for scraps , instead of trying to be at the table. They got a global brand, distribution, solid design, some experience in hardware and software but they are afraid to be more than an accessory maker even now when opportunities abound.
Thomas March 16, 2015 um 3:27 pm
I’m a little skeptical about the prospects of a device when the two main audiences are health nuts and folks who are too lazy to pull a phone out of a pocket. Apple will probably sell quite a few, but I think 30-40 million is really optimistic.
jjj March 16, 2015 um 4:47 pm
Well over 1 billion units wristwatches are sold every year and that’s in a world where so many gave up on them.
So the job for smart bands/watches is to convince as many as they can from the 2 categories, people that still wear a watch and people that don’t. Someone that doesn’t wear one is harder to convince. For the ones that do ,the problems are mostly at the extremes , high end and low end. When it comes to hundreds of $, people want the brand and looks, when it comes to 3$ watches, smart ones can’t compete in price. All in all i would say it’s rather easy to sell to a huge market , as long as you have a decent product at sub 100$ but nobody is offering that yet.
anothername March 17, 2015 um 8:12 am
Yep. I don’t need a watch 'cos my phone shows the time.
Also, I don’t want a piece of running electric kit pressed against my wrist all day. Maybe that’s just me.
Paul March 16, 2015 um 3:01 pm
I think people forget this is a 1st generation product. Yes it was great and really good, but things didn’t really take off for Apple until the 3GS turned up.
Also, unlike nearly every other launch in which it was pretty easy to figure out what it does and "get it" the watch is a lot harder sell for the reasons above. So I expect it to be popular, particularly with people who have medical issues, but its uptake is going to be a lot slower than with any other Apple product (but at the same time, they only have to beat 300,000 units in a year to be one of the biggest smart watch players in the business)
Mackay Bell March 16, 2015 um 11:51 pm
I don’t think you guys get it when it comes to Apple. Apple has built a loyal fan base of creative people who have MONEY and love technology. Not all are rich, but there are plenty of them that have enough spare cash to spend on cool gadgets. I buy at least one of each new iPod Nano design that comes out. Not because I need it, but because it’s fun to play with. I update my iPhones just about every generation, even if I have to pay a penalty. Why? Because I use my phone so much, it’s worth a couple hundred extra bucks to have the best possible device.
The question for me has never been whether I would buy one, but how many and at what cost. I’ll probably buy the cheapest Sport Watch in black right out of the gate, wait a year to buy a stainless steel version. I’ll probably buy several bands. I know plenty of other Apple fans that will buy more than one watch too. I think the gold ones are more for Asian billionaires, but the fact that they are out there makes it all very interesting.
Six months from now, Apple can come out with a plastic version for $199. They can also come out with a red steel special edition for $2,999. The beauty of this is they can offer a huge range of pricing. A year from now the aluminum version might go to $299. Apple thinks long term.
Will 10% of iPhone users buy an Apple Watch? I don’t know. But I would bet there are 1% of iPhone users, hard core Apple fans, that will buy several and update every year. And also might spring for a gold version someday.
This talk about value/cost/practicality misses the point. There are plenty of people that shell out hundreds of dollars every year to buy sports tickets, sports memorabilia, cable television subscriptions. There are more well heeled sports fans that spend tens of thousands or more on luxury boxes. There are people that spend $250 on theater or concert tickets. Some people who blow several hundred every week in a nightclub.
There’s more than enough Apple tech geeks who see gadgets as their main entertainment for Apple to sell millions of these every year. At minimum.
The second part that everyone is missing is Apple pay. If that becomes common place enough that using your watch to pay for most of your daily expenses becomes possible, having a watch that is also all your credits cards is extremely convenient. A watch that safety replaces cash and credit cards is in a whole new category of easy of use. That could be the difference between several million and a hundred million sold.
Laine March 17, 2015 um 8:45 am
I think the makers of smart watches should be targeting women. If you keep your phone in your handbag your can’t hear it and they say it’s unhealthy to keep it in a pocket. And women have less pockets than men. I also know quite a few women who have fitness bands so having one accessible gadget for phone, watch and fitness sounds like a good idea to me. That said I’m still deciding between Samsung and Fitbit.