Does Apple Watch have enough street cred to kickstart the wearables market?

Apple’s “one last thing” at its annual iPhone launch event last night (9 September) was the much-anticipated Watch, but the verdict is still out as to whether Apple’s first wearable will be marketed clearly to give it enough consumer appeal to jumpstart the “Stone Age” wearable market.

https://www.youtube.com/watch?v=gCluaJe3lb4

The Apple Watch, not available until next year, runs apps such as Twitter, Maps and health trackers – much like rival devices such as the Moto 360, Sony Smartwatch 3, LG G Watch R and Samsung Gear S.

But where the Apple Watch differs from rivals is its rectangular screen, choice of wristbands, a dial on the side dubbed the “Digital Crown” allowing users to scroll through the display and integration of Apple Pay – the NFC contactless payment service the company also unveiled at its event last night.

The marketing challenge

However, despite the widespread coverage for Apple’s event and the buzz the Watch has already created among consumers on social networks, the brand still has marketing work ahead of it if it is to not only create mass appeal for the Watch, but kickstart the wearables sector as whole.

A recent report from CCS Insight stated that the wearables market is currently in the “Stone Age”, with sales of smart wearable devices estimated to be just 22 million worldwide this year. By contrast, Apple alone sold more than 150 million iPhones in the fiscal year 2013.

At the time the report was released, last month, CCS Insight did proffer that the market could still yet be changed “beyond recognition” if a major player such as Apple entered the category.

But it may yet be time before that prediction comes true, not least because the Watch is not being sold as a standalone device. Instead pricing for the Watch starts at $349 (around £216, although UK pricing has yet to be confirmed), but it must also be used with a compatible iPhone – either the new iPhone 6 or iPhone 6 Plus, which are out in September, or the already available – but still expensive – iPhone 5, iPhone 5C and iPhone 5S.

That additional cost may not be a problem for the average iPhone user, a consumer that typically wants access to all the latest available tech and has a median annual income of $85,000, according to comScore’s Mobile Metrix. Indeed, such a high additional price point could set the Watch out as an aspirational product, even for the consumers that can’t afford it, which may lead them to trialling cheaper Android devices and boosting the market as a whole.

As it’s not available until next year, Apple did not have an ad to present for the Watch as it did its two new iPhone’s, but the reveal video was firmly focused on the aesthetics of the device – clearly addressing some of the “too clunky” and “too geeky” criticisms directed towards rival Watches by highlighting its premium materials and attention to detail.

However, the design itself seemed to “polarise” people, according to Paul Armstrong, founder of digital marketing consultancy HERE/FORTH.

He adds: “Depsite attempts at making this female friendly from the outset, it is unclear that once the intiial orders fly off the shelves to fanboys how this will be adopted by the mainstream due to its bulky size and quirky features. One thing that is key to the success of the device is that the fashion industry and lifestyle influencers adopt it quickly so it because less tech focused.”

Another Watch video showcased at the event spent 4 minutes discussing how the Watch’s apps and features, such as its heartbeat monitor, can help users lead more healthy and active lifestyles.

https://www.youtube.com/watch?v=CPpMeRCG1WQ

But it is unclear whether marketing messages combining both design and fitness will be enough to mark out a purpose for the Watch and therefore a case for the wearables category as a whole. As Benedict Evans, an analyst at venture capital firm Andreessen Horowitz tweeted last night: “Apple Watch is very like the iPad. They’ve done the ‘thing’ very well, but is the ‘thing’ itself useful?”

Indeed, Apple made a market for the tablet – once considered a device that had no utility when most people owned both a smartphone and a laptop – with the iPad. But does Apple still have enough marketing chutzpah to create and lead a sector again in the same way?

James Hart, strategy director at global media agency Carat, doesn’t think so. He adds: “The Watch’s big opportunity is to be a sensory addition to our lives, but at the moment it is not doing this. It’s attached to your arm, not connected to it. There is a land-grab for screens, but they may have missed the opportunity to be something more than just another screen.”

Apple and its rivals also have the challenge of convincing people that after years of not wearing a watch all of a sudden they need one – and Dan Beasley, partner and head of mobile at social media and marketing agency Jam can’t recall a time an iPhone user has complained getting their phone out of their pocket when it vibrated with a notification was a huge inconvenience.

”I’m sure Apple will sell more than enough of the first version to the diehards. The real crunch will come with the second and third version – if they get that far – and that’s when Apple will struggle as unless they pull something remarkable out of the hat and create a problem that none of us knew existed then I don’t see the consumer need or large enough addressable audience for this to become a long-term sustainable product range for them.

”I doubt there were many Swiss watchmakers that didn’t get a good nights sleep last night.” Beasley says.

A new category

On the other hand (or it wrist?), Forrester’s vice president and principal analyst James McQuivey believes the Watch strategy has “firmly established the smartwatch as a new category”.

He adds: “Would-be competitors may take solace in how many months they have before the watches go on sale, but they have a lot of work ahead of them if they want to compete with Apple on the more complete experience the Apple Watch offers. It’s not just a device; it’s a lifestyle.”

With myriad devices offering essentially the same features and enough choice that consumers can pick a smartwatch that suits them, the battle could ultimately come down to which brand shouts the loudest in their marketing.

In the UK, Apple was the 55th biggest spending advertiser last year, according to Nielsen, with its outlay up 2.6 per cent to £30.5m. Samsung was the only mobile hardware provider spending more, with its ad spend at £53.5m for the year, down 17 per cent on the 2012 when it was an Olympic sponsor. However, it is worth pointing out that a proportion of spend for both of these brands would have been dedicated to products not considered “mobile”, such as laptop computers and home appliances, in Samsung’s case.

With the Apple Watch not out until next year, observers will take note of how -or if – the buzz around smartwatches created by Apple affects Christmas sales of rival devices. The choices consumers make this festive period will also influence Apple’s marketing decisions – whether it hones in on design, lifestyle, availability of apps and simply how much its marketers choose to spend on advertising – as it prepares for the rollout next year.

By entering a new category, Apple has set itself up for its biggest marketing challenge since launching the iPad in 2010. And as Apple has already seen with the iPad – tablet sales are forecast to be slowing down this year, according to IDC – its marketing challenge is not only to create demand for a new type of device, but sustain that consumer appetite over the long-term.

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