Categories: Global Tech News

Apple Watch Commands 2 in 3 Smart Watch Sales, WatchOS 2 Sweetens the Pitch

For wearable fans fans of Apple, Inc.’s (AAPL) Watch wearable last week brought a substantial dose of disappointment.  Apple was widely expected to release Watch OS 2 for the wearable on Wednesday (9/16) having said as much in a Sept. 9 press release, but in the eleventh hour the plug was pulled on the OS 2 rollout.

A statement from Apple explained briefly that some manner of bug was to blame without elaborating further.  The company wrote:
We have discovered a bug in development of WatchOS 2 that is taking a bit longer to fix than we expected. We will not release WatchOS 2 today but will shortly.
The delay was somewhat surprising, given that the OS had been in testing since early June and had reached Golden Master status (sort of like “release to manufacturing”) on Sept. 9. Fortunately, this unexpected speedbump has been rolled over; nearly a week later, and the update has finally arrived airing Monday.

The Time Lapse face in Watch OS 2
So why care?  Well, whether you appreciate Apple’s wearable or could live without it is apparent that Watch OS 2 adds a lot of functionality.  Among its features:

  • Facetime voice calls
  • Tetherless Wi-Fi — Now you can jump right on hotspots and don’t have to be tethered to your phone (making the watch far more functional during workouts and on the go)
  • Third-party native apps
    • Have access to Wi-Fi, Taptic engine, sensors, and can display “Complications” (notifications)
  • Mail improvements (respond w/ canned message, sort/organize email, etc.)
  • Siri gets smarter
  • Activation lock — allows owner to lock out their stolen device
  • WatchConnectivity — faster communication w/ iPhone.

And of course there’s overall performance improvements.  I recommend MacRumors‘ guide to the update for more in-depth info for those interested — it’s quite thorough.

Overall the future of the Apple Watch looks bright, both literally and metaphorically.

Yes, the literal part is a bit of a pun, and yes probably a bad one given that it only applies to the anondization — one piece of what’s new on the design front.  Apple announced earlier this month two new anondized aluminum colors — rose or yellow gold — color options at the base $349/$399 USD “Sports Edition” price points.  The options, which correspond closely with those of the iPhone 6S/6S+ should help to pull new customers in.  

Apple is also expanding its selection of accessories with new bands, including the (PRODUCT)RED band which donates a portion of its proceeds to the Global Fund to help the fight against HIV and AIDS in Africa. Among the other bands in this darker “Fall Collection” include:

  • Walnut
  • Stone
  • Antique
  • Fog
  • Turquoise
  • Midnight Blue
  • Vintage Rose
  • Lavender
  • Orange

While surely the debate over paying a whopping $49 USD for a simple fluorelastomer wristband, the company is at least making doing so somewhat more compelling by keeping its selection fresh.  And Apple is clearly benefiting from the fact that even the cheapest third party bands (See: MacRumors‘, AppleInsider‘s, or iMore‘s coverage, for examples) are around $20 USD (incl. shipping) for plastic models.  Of course Apple’s prices for metal and leather bands more egregiously eclipse some third party models, but for plastic/polymer type bands, the price difference isn’t quite as large.

Probably the best news for Apple is simply reach and availability.  Later this month its Watches are coming to numerous resellers [full list] across 12 countries, or just over half the countries where the Watch is currently available.  Speaking of countries, the global retail reach of the watch is also ballooning.  In April the wearable was only available in nine markets (Australia, Canada, China, France, Germany, Hong Kong, Japan, U.K., and U.S.).  Since then it’s added an additional 13 markets:

  • June 26: Italy, Mexico, Singapore, South Korea, Spain, Switzerland, and Taiwan
  • July 17: The Netherlands, Sweden, and Thailand
  • July 31: New Zealand, Russia, and Turkey

On Sept. 25, it will add Austria, Denmark, and Ireland bringing its total to 25 markets.  India, Norway, and Poland haven’t received an official ship date yet, but they’ve added the product to their local stores, indicating an imminent launch in the next month or so [source].  With those countries the device will be available in 28 countries — nations that comprise most of the world’s top markets.

Apple Watch global avability: Red-pink — April ; Orange — June ; Yellow — mid-July ; Green — end of July ; Blue — this month ; Purple — unannounced but anticipated soon
While sales in Europe may be somewhat dampered by the large VAT (valued added tax) that stretch as high as EUR€80-90 (~$90-101 USD) [source] on the base Sports Edition models, sales in Apple’s largest market outside the U.S., China, appear healthy.  

Market research firm TalkingData reported that sales in China had surpassed 1 million late last month [source].  The Int’l Data Corp. (IDC) pegged global sales at Q2 at around 3.6 million units — good for second place in the smartwatch and smartband market behind only FitBit, Inc. (FIT).  Most of those sales came in the U.S.  But the latest numbers from TalkingData suggest China emerging as a strong second pillar of the campaign.  To date the Apple Watch has probably sold around 9-12 million units.

For the year Apple looks well-positioned to move somewhere between 18-25 million smartwatches.  While that’s a far cry from the 40+ million units some analysts were prophesying, it’s also far from a flop.  In fact, if you set aside the likes of Fitbit and China’s Xiaomi (3.1 million wearables sold; 3rd place in 2015Q2) who sell lower cost “smartbands”, the picture becomes starkly slanted in Apple’s favor.

The most direct competition in Q2 was from Samsung Electronics Comp., Ltd. (KRX:005930) (KRX:005935) who moved a mere 600k units, according to the IDC.  Telling Samsung is borrowing graphical elements from Apple for its latest generation fo smartwatches.

To put things in perspective, Jitesh Ubrani, a senior analyst for IDC, told The Guardian late last month that Apple was outselling all other rival “smart watch” class devices by 2-to-1 (or put differently, two in every three smart watches sold is an Apple).  It was also noted in the same piece that Apple is not only outselling the entire lineup of its most comparable competitor (Samsung) 6-to-1, the Apple Watch in one quarter outsold the most succesful Android smartwatch (likely the Moto 360) by 80-to-1.

Those are some pretty incredible numbers.

Even what I would argue was the worst (or the only truly laughable) branch of the Apple Watch tree — the ludicrously overpriced gold alloy Watch Edition — is getting a more practical reenvisioning with the help of luxury French watchmaker/brand Hermès Int’l SCA (EPA:RMS).  With ten different models with custom leather bands priced at $1,100 to $1,500 USD these new models aren’t cheap (despite Apple design chief’s Jony Ives’ claim that they don’t make Apple an “exclusive” company).

Yet, compared to the Watch Edition, which carried no well-known luxury watch branding while costing nearly ten times as much, I would argue that the Hermès partnership arguably represents a much more attractive package to lure in afficionados of pricey timepieces.  From the start my biggest complaint was that Apple missed the boat not partner with a well known luxury watch brand for its high end line.  Well it’s finally adopted that obvious strategy, I’m happy to note.

Apple’s partnership with Hermès adds a bit of prestige to Apple’s high end offerings.
And it’s only getting brighter for the wearable’s remaining 2015 sales half.  In addition to the rollout to six new nations in the next month or so, in existing markets Apple is expanding its selection of third party retail partners.  Most notably in the U.S. and Canada it’s paired up with Best Buy Comp., Inc. (BBY) who was so enthused by early sales results it decided to expedite rollout across its entire chain.  T-Mobile U.S., Inc. (TMUS) and Sprint Corp. (S) — America’s third and fourth place cellular providers, respectively, also will launch the device this Friday (Sept. 25).  It’s also partnered with Maxfield (an LA, Calif. fashion/retailer), Modérnica (Puerto Rico, USA; 3 locations), and Jump+ (Canada; 9 locations).

A similar push is being carried out globally, as well.  In addition to Canada and the U.S., Apple has partnered with over a dozen more third-party retailers in six other nations — Australia, New Zealand, France, Germany, Japan, and the UK.  BGR has a full list.

With supply and cost issues (which recent reports indicate may be due heavily to Japan Display Inc.’s (TYO:6740) struggles with producing Force Touch screens) easing and with orders — which slumped somewhat in June-July after a strong early slog — now picking back up, the future looks bright for the world’s most popular smartwatch.

If there’s one knock pragamatically speaking, on the Apple Watch, it’s that it’s overall not shown quite the ability to generate wearables believers as some hoped.  Wearables remain a niche market — even if the Apple Watch is expanding that niche substantially.  Still, with little sign of a challenger, expect Apple to reign over holiday seasonal smartwatch sales.  With few star models, Google Inc.’s (GOOG) Android Wear will have to bide its time and hope for a better challenge in 2016.

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