Apple’s recent Worldwide Developers Conference (WWDC) highlighted their software plans for the next 12 months across several product categories. While we will have to wait until September to get our hands on new Apple hardware, WatchOS 5 certainly highlights Apple’s commitment to smartwatches, especially in contrast to some others in the industry that have lost focus. Even though innovation in wearables has slowed in recent years, the industry stops and listens when key innovators, such as Apple, showcase their next-gen software or hardware.
Apple remains the comfortable leader in the wearables category, finishing 2017 with 53% of overall revenues, thanks to a 62% unit share in smartwatches. Apple’s success is especially impressive as their market comes down to a single product SKU, which is the best-selling single product against all other smart, hybrid or mechanical timepieces, despite competition of hundreds of smartwatch designs and thousands of timepiece designs. 2018 has shown that competition in the wearables market is again becoming fierce, with fitness device giant Fitbit and wristwatch giant Fossil both posting increasing return on investment for their smart and wireless watch offerings.
Apple showcased new workout modes including Yoga and Hiking tracking functionalities at WWDC, highlighting the growing importance of software and sports research in smartwatches today. While workout types and tracking modes are not in any sense new, the increased functionality and inclusion of a wider array of sports signals Apple’s intentions clear; it has its eyes set on the sports watch market. With the inclusion of heart rate monitoring software and GPS tracking, smartwatches can only build on what sports watches offer the consumer. With greater processing capability and internet access, real time, personalised and actionable insights are now possible. We expect this to be the next step in wearable sporting technology.
The second announcement that caught our eye, which focuses on the communications capability of smartwatches, is the Apple Watch’s walkie talkie functionality. While voice notes have been available for some time via messaging apps, some of the user friction will be reduced through UI optimisation. This may seem like a trivial feature, but voice messaging has been a trend in China for some time. The ability to quickly and easily send voice notes between Apple watch users will no doubt be a function developed with the Chinese consumer in mind. Apple has made significant inroads into the Chinese market during 2017, with the iPhone X becoming one of the top selling models since its launch and the Apple Watch increasing shipments into China by 81% year-on-year in Q4 and 39% in Q1. Apple’s Momentum looks set to continue, with further solidification of its position in China during the rest of the year expected. Overall, as more intelligent, and to some degree localised, communications features make their way into smartwatches, the utility of smartwatches as a communications product is expected to become more apparent to consumers.
In line with their focus on education, Apple did not shy away from the possibility of integrating their technology further into schools and universities. Several American Universities have piloted e-student identification cards loaded onto the Apple Watch, utilising NFC functionality. While by no means do we expect all schools and universities to pick up NFC and Apple Watch compatible security systems, this demonstrates a vision of the future for personal devices and identification. Although NFC authentication technology in consumer devices is not restricted to Apple products, Apple has been a catalyst of its wider use, particularly through Apple Pay. Alongside advances in biometric security, from fingerprint sensors to FaceID, NFC certainly looks set to build the next generation of personal security systems.
Overall, the developments showcased at WWDC were not ground breaking. Nevertheless, they do have the potential to boost the Apple Watch’s appeal further. The wearables market overall has seen turbulent development, and therefore successful vendors have been somewhat cautious with new product launches. However, Apple has a proven and significant position in the smartwatch market. While the wearables announcements at WWDC 18 were incremental improvements, these will only drive further sales.
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