Maybe there's no smartwatch market, just an Apple Watch market?
The last few months haven't been good for the smartwatch product category. Google delayed Android Wear 2.0 until next year, Motorola seems to be putting smartwatches on hold, and Pebble is selling to Fitbit. It's even led my colleague, Andrew Martonik, to declare the entire category a "zombie". But here's the thing — while smartwatches might be stalling, Apple Watch seems to be picking up speed.
Here's Andrew's take away, written for Android Central:
So where the heck are smartwatches going? Right now it doesn't seem like they're going much of anywhere. The big companies like Samsung (hey, and Apple) can afford to keep making them purely from an ecosystem point of view, but we have enough data at this point to show that nobody can really make any money selling smartwatches right now.
For me, the growth seems to be coming from the lower end of the "smart wearable" spectrum: think fitness bands and activity trackers. Devices like the Samsung Gear Fit 2 and Fitbit Blaze are great because they're small, comfortable and inexpensive when compared to "full" smartwatches, yet they have lots of the same functionality. That makes sense for a lot of people who don't want to commit to a full smartwatch.
Apple doesn't break out Watch sales in their quarterly reports, the way they do iPhone, iPad, and Mac sales. So, all we have to go on is external metrics and guesstimates. There's a lot of dark matter, though, that helps us get a sense of the gravity.
Watching the watch makers
Apple didn't delay watchOS 3 the way Google delayed Android Wear 2.0. They shipped it right on schedule last September. And it was damn good, cutting out a lot of the early confusing and tightening focus around performance and fitness.
Apple also didn't hit the brakes on hardware, they hit the gas. Not only did they introduce a faster, dual-core model with the Series 1, they introduced a swim-proof, GPS equipped, longer lasting, brighter model with the Series 2. The Series 2 might have raised the bar, but the Series 1 lowered the cost of entry to $269.
Anecdotally, starting around Black Friday and going into the holidays, iMore typically sees an increased interest in our iPhone coverage as people try to decide what they want to buy. This year was no exception, except for one thing — interest in Apple Watch rose even higher than iPhone for the Black Friday weekend.
That's no doubt a reflection of both the lower price point and the deals being offered by some retailers, but it's also a reflection of both of those things succeeding in driving interest.
It took a generation or two for both iPhone and iPad to move from niche to mainstream. It will take Apple Watch even longer, given that it can't (yet) be a primary computing device. But it's moving in the right direction.
Curiously, one of the speed bumps Apple Watch continues to face is perception more than reality: How American media chooses to report on it.
Expectations drive narratives. Apple Watch outselling Amazon Echo by 3x yet Apple Watch is deemed a disappointment vs Echo a raging success.— Neil Cybart (@neilcybart) November 29, 2016
Echo is also barely available outside the U.S., and is a voice interface that only recognizes English. If Apple Watch was similarly hobbled, it would no doubt be considered an even bigger disappointment.
It's time to recognize that, for the last few years, the reality distortion field has been pointed decidedly away from Apple.
The (Apple) Watch market
Circling back to Android Wear devices and Pebble, my guess is that wearables may shake out a lot like tablets. There's no real tablet market, just an iPad market. And there may not be a smartwatch market, just an Apple Watch market, at least for now.
(iPad sales don't enjoy the acceleration they used to, but it's still a business so large every other company in the world would sacrifice their first born products for it.)
Andrew's points are apt, though. The bottom-end Fitbits and their ilk are filling the iPod shuffle to iPod nano space in the wearable market, and that's certainly a popular space to fill, especially with Apple staying completely focused on the high end.
Premium position is something Apple knows well, though. It lets them make the type of products they want to make and be extremely successful with or without majority market share.
What makes Apple Watch uniquely interesting right now, though, is that it's premium positioning has become increasingly affordable as well. It's not as expensive as a phone and doesn't require a service plan, making it much easier to gift, and yet it's also capable enough to add significant value in a few key areas, including fitness tracking, notifications, and communications.
Series 1 and holiday deals on the original mean people who've been waiting can now get in at a lower price than ever before. The new Nike+ line, priced the same as Series 2, could increase appeal for fitness enthusiasts, and the new Hermès options and the all-new Ceramic Edition ensure the premium premium is still there for those who want it.
Smartwatches may be zombies, but put it all together, and I wouldn't be surprised if Apple Watch turns into one of the sleeper hits of the holidays.
Update: When asked about Apple Watch sales, Tim Cook told Reuters:
"Our data shows that Apple Watch is doing great and looks to be one of the most popular holiday gifts this year," Cook wrote. "Sales growth is off the charts. In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product's history. And as we expected, we're on track for the best quarter ever for Apple Watch."
That's with Apple Watch Series 2 being severely constrained since launch in September. They're sold out almost every time I check online or at retail. Imagine if Apple could meet demand?