Apple launches Apple Watch, and retailers will wait and see

March 9, 2015 05:20 PM

Apple Watch’s time is almost here.

At Apple Inc.’s live launch of the product today, CEO Tim Cook announced the smartwatch will be available in the U.S. and eight other countries on April 24. Preorders start April 10.

“Apple Watch is the most personal device we have ever created,” Cook says. “It’s not just with you, it’s on you.”

Retailers may first use Apple Watch to promote mobile payments in stores, experts say, though those with strong apps may develop ways to use the watch to make those apps even more convenient and easy to use.

The highly anticipated smartwatch works in conjunction with consumers’ iPhone 5s and later running iOS 8.2 or later, which is available for download today, using Wi-Fi and bluetooth. Through the touchscreen and voice activation, consumers can answer calls, text and email using the watch, as well as run apps that have been designed for it.

The invite-only audience watched as Apple demonstrated the smartwatch, taking the viewers through a work day with the Apple Watch. A consumer can track his workout, open his garage door, draw and send an image to another Apple Watch wearer, order an Uber ride, store a boarding pass and unlock a hotel room, all on the watch.

The watch alerts wearers of a notification with a subtle tap, so they feel an alert, instead of possibly not hearing it if a phone is buried or if they are in a noisy location.

Apple is also touting the watch as a fitness coach, as it tracks daily activity, sends customers reminders to stand up and sets goals to burn more calories, among other features.

“We think Apple Watch will become integral to your day,” Cook says, noting it has 18 hours of battery life.

While is the watch offers a touchscreen, for speed, zoom and accuracy, the watch has a knob on the side, called a Digital Crown, that helps with navigating the wearable.

The Apple Watch comes in three collections, the Apple Watch Sport, which starts at $349, the Apple Watch, ranging between $549 and $1,099; and the Apple Watch Edition, made from 18-karat gold, which starts at $10,000.

Online direct sales company Inc., No. 1 in the Internet Retailer 2014 China 500, announced it plans to start selling Apple Watch on April 24. Alibaba Group’s marketplaces, which account for 80% of online sales in China, will also be selling Apple Watch.

Each watch also is equipped with an NFC chip, making it another way to use Apple Pay in store. Shoppers hold their Apple Watch near a payment terminal, the watch beeps and the transaction is done.

“Using Apple Pay via Apple Watch is slightly more convenient than pulling out an iPhone to make a payment,” says Bryan Yeager, analyst at market research firm eMarketer. “While those few milliseconds may seem like splitting hairs, it's important when trying to alter ingrained consumer behaviors of paying for goods at the point of sale with cards and cash—both already very convenient and relatively frictionless payment methods.”

Retailers are likely to take a wait and see approach, says James McQuivey, principal analyst at Forrester Research Inc. Until millions of people have an Apple Watch, it won’t pose an opportunity or threat, he says. If the smartwatch gives Apple Pay a boost, retailers might take it more seriously, McQuivey says.

Retailers can get Apple Watch to do whatever the iPhone app tells it, McQuivey says. Retailers that have strong apps, like Target Corp. with its coupon app Cartwheel, will find Apple Watch as an extension opportunity, he says.

With a wearable, retailers can take advantage of having the device on consumers’ wrists, such as with beacon technology, says mobile marketing firm Urban Airship. Beacons are small pieces of hardware that can pinpoint a consumer’s location by communicating with smartphones via Bluetooth Low Energy. A beacon push notification coming to a shopper's wrist can help navigate a shopper to all of the products on her shopping list.  Or a watch notification can alert consumers when their prescription order is ready, and alert store associates via beacons when the customer is in range.

The Apple Watch may also lead to advertising opportunities for retailers. Apple's mobile advertising platform iAd took 2.6% share of the $18.75 billion US mobile advertising market in 2014, according to eMarketer, up from 2.44% in 2013. iAd took 5% share of the $9.65 billion US mobile display advertising market this year, according to eMarketer, up from 4.9% in 2013.

“If there are eyeballs on Apple Watch screens, there will be ads,” says Mike Kisseberth, chief revenue officer at Purch, an online publishing company. “The question is, what form they will take to create an experience that delivers real value for both the user and the marketer.” 

So far, the market for wearables hasn’t boomed, and wearables have been adopted by fewer than 5 million people, says James McQuivey, principal analyst at Forrester Research Inc. McQuivey estimated that 10 million consumers will own an Apple Watch by the end of 2015. Some of those consumers will already own a Fitbit or Nike Fuel band, so it won’t automatically triple the market, but will more than double it, McQuivey estimates.

“The very fact that the watch is made by Apple that will provide a kind of assurance to customers as well as developers that this platform is worth betting on,” McQuivey says. “That's Apple real secret sauce: its developer ecosystem will grab hold of Watch very quickly, extending existing iPhone apps where appropriate to make them ‘watchable,’”

Catherine Boyle, senior mobile analyst at market research firm eMarketer, agrees that Apple will spur adoption in the wearables market, as long as it can add more value to consumers other than saving a few seconds of pulling a smartphone out of a pocket.

"Enthusiasm for smart watches has been relatively low, suggesting the wearable tech sector needs a 'magic' product to spark adoption," Boyle says. "Apple Watch is best positioned to be that product, given the device's close association with the iPhone and the size of the iPhone user base—one in four U.S. consumers regularly uses an iPhone."

Follow mobile business journalist April Dahlquist, associate editor, mobile, at Internet Retailer, at @MobileInsiderAD.







Top Solution Providers