The Apple Watch is set to hit the market in April, at a time when the smartwatch market appears to be largely up for grabs.
Canalys released a report today that claimed manufacturers shipped just 720,000 devices featuring Google's smartwatch OS Android Wear in 2014. For context, 4.6 million total smartwatches and bands shipped last year, and mobile market newcomer Pebble shipped more than 1 million units from its 2013 launch through 2014, according to Canalys.
Meanwhile, J.P. Morgan Chase wireless analyst Rod Hall recently upped his target for Apple stock price to $145 from $140 based on optimism for the Apple Watch, according to this Barron's blog post. That excitement is based on the expectation that 5% of 525 million projected iPhone users will buy the Apple Watch this year, resulting in more than 26 million shipments. Hall was even bold enough to extend this prediction into 2016, when he sees 13% of iPhone customers buying the Apple Watch, good for more than 55 million units.
So, at least one person expects the Apple Watch market to be four times larger than the smartwatch market in its first year on the market, and then to more than double in size in its second year.
That's a lot to live up to, especially considering that Google, which recently boasted more than 1 billion active Android users, could only muster up 720,000 Android Wear users in 2014.
So what does Apple have to do to accomplish this?
Well, Canalys vice president and principal analyst Chris Jones chided Samsung, which still sits atop the smartwatch and wrist band market, for struggling "to keep consumers engaged." Apple hardly has any trouble with that.
However, Jones also said Samsung "must work hard to attract developers while it focuses on Tizen for its wearables." That's an important issue to mention for the slow-moving smartwatch market – Samsung is in the middle of transitioning away from Android in favor of its homegrown Tizen OS. That surely slowed things up. Regardless, this simply isn't a possibility for Apple, so that won't happen.
As for attracting developers, Apple made its WatchKit SDK available to developers in November. Especially given the iPhone's lofty recent numbers, developers likely aren't ignoring Apple's new product category.
One consistent theme in the discussion about the smartwatch market involves the hardware capabilities. People won't use the devices if they find that the battery is always dead. The same thing goes for functionality – if they need to push a button just to wake up the screen and see what time it is, then it's not much more useful than a smartphone. This is kind of an inherent flaw in smartwatch design – a screen that is constantly on burns through a battery.
Although Canalys analyst Daniel Matte said that the Apple Watch will feature "leading energy efficiency," which Matte said Android Wear "will need to improve significantly in the future," a recent 9 to 5 Mac report cited Apple sources who claimed that the Apple Watch's battery life will only last three and a half hours under standard application use with the screen turned on. That's just about on par with the battery life of Android Wear devices.
Battery life is a legitimate concern, and it's important enough that any shortfall in that department will earn the Apple Watch negative reviews. Judging by that 9 to 5 Mac report, Apple knows full well how important that is, and the company has all the money in the world to throw at the problem. It's a safe bet that Apple eventually extends the battery life of its smartwatch, but at least in its first year, battery life could be a serious obstacle to adoption.
However, this is all beside the point. The one thing Apple will need to do to meet these lofty expectations for the Apple Watch is convince people that they need one. I'm still convinced that's going to be a hard sell.
A lot of the excitement over the technology stems from Apple's history with new product categories, specifically the iPad. But the iPad did something that no other product did at the time – it combined the mobility and mobile apps that the iPhone had just introduced to the market with the screen size of a laptop. But the growing size of smartphone screens, especially that of the iPhone, are already dragging down iPad sales. People just don't need two devices that do the same thing.
That's where Apple's real challenge is with the Apple Watch. I've said in the past that Apple can succeed in this market by making health apps as important to consumers as media and communications apps, but less-expensive smart wristbands already capture that information and relay it back to a smartphone. They're discreet, and for some users, only worn when exercising. And anyone familiar with how Google Glass fared in the public should be hesitant to expect consumers to flock to a wearable device.
Clearly, the technology industry at large sees the smartwatch as a viable product category. The reality could be that they're only attacking it because they've run out of other categories.