Thought Bubble: Apple Watch Announcement

Tech lovers worldwide eagerly awaited the Apple Watch announcement at the company’s Spring Forward event yesterday in San Francisco. Before CEO Tim Cook could finish detailing the new product’s features and functionality, industry experts and enthusiasts alike were debating Apple Watch’s success. Here we take a look at whether the news of the smartwatch will capture consumer interest in the UK and US…

Paul Davies, UK Senior Leisure and Technology Analyst at Mintel

Apple has unveiled its first entry into the smartwatch market; the Apple Watch, which is due to launch in the UK on April 24th 2015. Clearly the company is looking to attract everybody from health enthusiasts to luxury watch buyers, by launching a huge selection of 38 versions to choose from.

The range starts with the Apple Watch Sport, tailored to athletes and priced from £299, and is topped by the 18-carat gold Apple Watch Edition, priced from a cool £8,000.

Apple will be looking to emulate the success it has had within other technology sectors; where its strategy has often been to assess the competition before launching its own product in the hope of becoming ‘best in class’. Yet it could be about to embark on one of its toughest challenges yet, as it looks to trigger interest in a device that many consumers are clearly sceptical about.

While several smartwatches have been launched over the past 18 months, just 2% of UK consumers already own one. Meanwhile wearable technology in general has failed to excite consumers on a mass scale, with only 5% of UK consumers having acquired anything from a smartwatch to a fitness band to a head mounted display.

22% of US internet users aged 18+ reported buying a wearable electronic device within the past two years.

Despite that, Mintel’s forthcoming Connected Home report shows that a further 24% of UK adults are interested in acquiring a wearable device – so how can Apple convince this group that the Apple Watch is right for them?

Naturally the watch is only compatible with Apple’s own operating system, which rules out more than two thirds (71%) of existing smartphone owners in the UK. However those 29% who own an iPhone in the UK are incredibly loyal to the platform and the brand as a whole, and what’s more they are typically young, affluent and tech-savvy – making them the perfect target audience for smartwatches.

Highlighting the key functions of the Apple Watch will be crucial to its appeal. The company will have to demonstrate that its smartwatch offers more than merely ‘little conveniences’ in order to justify its £299+ price point. Consumers will want to see why having apps on their wrist provides a completely different experience to those they already have available on their smartphones.

Indeed, consumers are clearly confused as to what the actual benefits of owning a smartwatch are. Even 31% of those who say they are potentially interested in buying a smartwatch are not sure what they would use it for, according to Mintel’s Digital Trends UK Summer 2014 report.

Reassuring consumers about the battery life of its new device will also be paramount to its success, given that this has been a major concern for smartphone owners, an issue which is likely to extend into the watch market. Apple claims the battery life on its smartwatch will last for up to 18 hours, giving an advantage to the likes of Pebble and Samsung Gear which boast up to 7 days of low to moderate usage between charges.

Bryant Harland, US Technology Analyst at Mintel

The wearable electronics market in the US benefits from a burgeoning consumer interest; according to Mintel’s Electronics Retailing US 2014 report, 22% of US internet users aged 18+ reported buying a wearable electronic device within the past two years. However, the majority of that interest is currently focused on fitness wearables rather than smartwatches. As presented in Mintel’s Digital Trends Spring US 2014 report, just 3% of internet users reported owning a smartwatch, compared to the 18% who reported owning a wearable fitness tracker (eg FitBit) and 14% who reported owning smart fitness clothing in Exercise Trends US 2014.

Despite the apparent challenges in entering the market, Apple has perhaps one of the most significant advantages of brands that have released smartwatches so far: It has already been positioned on the border of technology and fashion branding. Apple’s customers tend to care about the brand and are likely to be loyal. According to Mintel’s Mobile Phones US 2015 report, nearly two-thirds of iPhone owners considered themselves loyal both to the operating system and to the manufacturer, compared to approximately 50% of all cell phone owners who said the same.

That isn’t to say that smartwatch buyers won’t care about the technical aspects of the devices. The app stores for both Pebble and the Samsung smartwatch launched with around 1,000 apps. Many of the apps for existing smartwatches and those planned for Apple Watch are leveraging the popularity of fitness wearables by integrating fitness and movement tracking. The central question for the Apple Watch will be whether the brand image is desirable enough to warrant its premium pricing and whether the device itself offers different enough functionality or usability from the iPhone for consumers to see a need to buy it in the first place.

Mintel’s Senior Leisure and Technology Analyst Paul researches and writes Mintel’s consumer technology reports. Prior to joining Mintel in 2012, Paul held marketing roles within the Consumer Electronics sector for retailers such as Comet as well as manufacturing companies including Binatone Telecom PLC.

Mintel’s Technology Analyst, Bryant Harland brings almost a decade of experience working in the tech arena, most recently as a Senior Technology Writer with Brafton News, where he oversaw the editorial team, wrote as a trade journalist and prepared a range of industry white papers.