Apple and those along the watch tower

In this new research note we discuss the launch and implications of 'Apple Watch', Apple’s much anticipated new product line and first in the emerging wearables category. The watch will launch in nine countries next month. The range of versions, sizes and accompanying bands present a plethora of options for consumers, and underline the importance of personalisation, fashion and emotion in addition to the technology and functionality in smartwatches.

An indicative estimate of sales in the first year would be around 25 million units (translated into revenue, this would equate to around 5% of Apple’s total business, and 30% of the entire traditional watch industry). Near term growth is likely to be comparatively slower than the iPhone and iPad, but the medium to longer term potential is there. Apple is far from the first into the Internet of Things (IoT); mobile operators are heavily involved, and Google bought the smart home firm Nest in January 2014 for $3.2 billion. However, its entry is particularly significant for two reasons. First, it firmly adds smartwatches to the mix (along with smartphones) as a candidate to act as a hub platform for consumers to manage multiple applications related to the connected lifestyle – be those related to the car, home, health, payments or identity. Second, Apple has a track record of galvanising a wider industry shift, with strong potential for a knock-on impact on software development, cross compatibility and standardisation between newly digitised devices and the mobile networks that underpin them, helping to spur the growth of the wider IoT.