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Tech pundits say the Apple Watch is a flop, but Apple begs to differ – so who’s telling the truth?
Clocking up the success of the Apple Watch
Read almost any tech website’s coverage of the Apple Watch and a familiar story emerges.
It’s a failure. No one wants to buy one. It was a huge mistake on Apple’s part, a gamble that hasn’t paid off and should simply be shelved. You get the idea. This narrative is persistent and near-universal. But is it true? We decided to take a look at the numbers to see whether the Apple Watch really is in a slump, and what can be done by Apple if it is.
It’s not hard to see why people might think the Apple Watch is struggling – almost the entire wrist wearable industry is still trying to find its feet. Former giants are falling left, right and centre. In 2014, Nike abandoned its FuelBand wearable. Jawbone is going out of business. Samsung and LG have given up. Even Pebble, which more or less kicked off the entire smartwatch craze, has been bought by Fitbit after incurring huge debts. Right now, this is an industry that may be best described as ‘chaotic’.
So why have these companies struggled so much in an industry that was once seen by many as a potential goldmine? Well, it may be a classic example of the Gartner hype cycle, named for the market research firm that first proposed it. The cycle describes the hype that surrounds new technology. First comes the peak of inflated expectations, soon followed by the trough of disillusionment as a number of players falter and collapse. Then comes the slope of enlightenment and, eventually, the plateau of productivity. It is likely that the hype peak drew in companies that simply weren’t able to compete, and have failed as a result. Apple though? That’s a different story.
A different approach
In contrast to so many wearable companies that have fallen by the wayside, Apple has actually been very successful with the Watch. A lot of that is to do with the very different way Apple views fitness data, and the way it convinces people to get fit and stay that way. Jay Blahnik, Apple’s director of fitness and health, summed up Apple’s approach like this: “Let’s not try to make this about the most you can do, let’s save that for the Workout app. This is not about the most you can do, but the least you should do every day.” Put another way, if you want people to get fit, they need achievable goals. There’s a popular fitness adage that you should walk 10,000 steps a day. Blahnik disagrees: “What a lot of people don’t realise is the average American does 2,500 to 3,500 steps per day,” he says. “So 10,000 is four times the amount the
average person does, which is why it’s really hard. And when it’s really hard for you to do, there is going to be burnout.” Preventing that burnout by setting goals that are only a slight amount above what users have already achieved is what keeps wearers coming back.
Another interesting insight comes from Rachel Kalmar, a fellow at the Berkman Klein Center for Internet & Society at Harvard University. She explains that wearables are like flour mills. “Though some consumers have ideas of things they’d like to bake, most don’t want flour, they want cookies,” she says. “The same is true for data: most people don’t want the data itself, they want cookies: the useful products and services that are built with this data.” Now compare that to what Blahnik says about the Watch: “Typical activity trackers also measure metrics but they tend to do them in numbers. We’ve built our entire design around a visual. Well, what’s interesting about a visual is numbers continue to get bigger. No matter how big they are, they can always be bigger. But a ring is either closed or not closed. So we’ve found there’s a real addictive behaviour in making sure that final ring gets closed.”
By taking away the raw numbers, Apple has been able to simplify the process of getting people fit, while at the same time being able to customise it to every user, thereby making it
more approachable. Blahnik says the goal was to make fitness a ‘ritual’ like brushing your teeth – something you don’t even think about. By focusing on the numbers, other wearables have simply scared users away.
This emphasis on fitness is likely to be one of the main reasons for the Watch’s success. Think about the Apple Watch launch. You could buy the wearable at high-end fashion boutiques, but you couldn’t just walk into an Apple Store and buy one. And, with its lofty £10,000 price tag, the Apple Watch Edition clearly was not aimed at fitness fanatics.
That’s all changed. The second version of the Apple Watch Edition starts at a much more reasonable £1,299, minimising the push for high-end fashion acceptance. In its place is a renewed focus on fitness. The Apple Watch Series 2 added water resistance, GPS functionality and a partnership with Nike. The slogan on the Watch’s online store page reads ‘Choose the Apple Watch that moves you.’ It all points to the idea that Apple has accepted that the Watch’s best chance of success lies in health and fitness.
That’s reflected in the Watch’s sales performance. According to Strategy Analytics, Apple sold 2.8 million Apple Watches in Q2 2017, up 56% from Q2 2016. The firm has previously reported that Apple sold 13.6 million Watches in 2015, 11.6 million in 2016 and 3.5 million in Q1 2017, meaning the company has supposedly sold over 30 million units so far. Not bad for a product that tech writers are claiming has failed.
Here are some more numbers attesting to the Watch’s success. Tim Cook says Watch sales figures are up 50% on last year. Market analysis firm Canalys estimates that Apple increased Watch shipments to stores by 77% year-on-year in Q1 2017. In fact, that 77% helped the entire industry grow 25%, showing how much trouble other wearable companies were in during the first quarter of 2017. And Canalys has also reported that Apple took a whopping 80% of smartwatch revenues in Q4 2016. Of course, without any solid numbers from Apple, these figures should be taken with a pinch of salt. But Tim Cook’s words on soaring Watch sales go a long way, so the fact that these latest numbers agree with him suggests they’re not too far off the mark.
So why did the pundits get it so wrong? A large part of the blame can be laid at the feet of a report from analytics firm IDC, which
claimed in December 2016 that the Apple Watch’s ‘growth’ (if you can call it that) stood at an eye-watering -71%. Yes, minus 71%.
Unfortunately for IDC, it got the numbers wrong. A day after the release of IDC’s report, Tim Cook told Reuters that “Sales growth is off the charts” for the Apple Watch. He then continued: “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.” Fighting talk, indeed.
Writing for technology website The Memo, pundit Oliver Smith recently argued that the reason the tech world misjudged the Watch is that it had a ‘difficult birth’, in his words. “Apple made three genuine missteps; the Watch was overpriced, too focused on apps rather than fitness and notifications, and aimed at breaking into the world of high fashion rather than mass market,” he wrote in early August 2017. But by September 2016, he argued, Apple had fixed all of those issues.
Apple doesn’t always get launches right. For every iPhone and Apple II, along comes a Newton MessagePad – a product that doesn’t get it right at launch, and has to be refined down the line (although we doubt the Watch will be killed off as unceremoniously as the Newton was). The point is that the Watch has found its niche as a fitness wearable, not a fashion accessory. Now that Apple seems to have realised this, the sales are flooding in.
Watch this space
So what’s next for the Watch? Well, despite its apparent success, Apple still isn’t the number one fitness wearable company if you include sport bands – that honour goes to Xiaomi, with Fitbit in second place and Apple not too far behind. Strategy Analytics pegs Xiaomi’s wearable shipments at 3.7 million units in Q2 2017, with Fitbit at 3.4 million and Apple shipping 2.8 million. But given Tim Cook’s bullish outlook on the Watch, it may not be long before it claws its way to the top spot. It should also be remembered that much of both Xiaomi and Fitbit’s success comes from sales of their entry-level fitness bands, a market that Apple has thus far sought to avoid.
Apple won’t be releasing a fitness band any time soon – it’s quite content offering a higher-end smartwatch. That approach has served it well so far, if Tim Cook’s statements are anything to go by. They also underline the risk that comes with trying to second-guess Watch sales figures when Apple keeps them well hidden. But like it or not, the Watch is here to stay – and it’s doing just fine.
A vast amount of hype surrounded the Apple Watch when it was first released.
Each Apple Watch can be personalised with a wide range of straps.
While other fitness trackers focus on the numbers, the Apple Watch takes a more visual approach to feedback.
Apple made a good move by ditching its ‘bling’ model and dropping the prices of other options.
The second generation Apple Watch added water resistance and GPS functionality.