Recent updates could separate the Watch from the iPhone
In the context of a marathon two-and-a-half-hour keynote presentation at Apple’s Worldwide Developers Conference that featured major announcements such as “Sign in with Apple” and an ultrahigh-end $11,000 Mac Pro, updates to the Apple Watch felt relatively low key. In our report covering the event, we highlighted the unveiling of a dedicated App Store as the most significant update to the Apple Watch (see Instant Insight: Apple Worldwide Developers Conference 2019). We believe it addresses two major complaints among developers — poor app discovery and monetization — and makes it easier for users to find and download apps directly to their Watch.
But having reflected more thoroughly on the future direction of the Apple Watch, I believe a native App Store is merely a further step toward the product becoming a completely standalone device, particularly as some variants of it now have built-in cellular capability. It wouldn’t be a huge step to break the tie from an iPhone for the set-up and management process. At minimum, allowing users to set up or pair the Watch with other devices such as an iPad or MacBook seems like a no-brainer, and it would create a different path to ownership for users who want an Apple Watch without having to own an iPhone.
At CCS Insight we’ve always seen this wrist-worn technology as being more than just watches that happen to do a few extra things, like alerting you to phone calls and messages and tracking health indicators. At our Predictions event in October 2018, we predicted that smartwatches would become a hub for peripheral devices such as smart headphones and smart glasses.
As the capability of the Apple Watch becomes richer, it’s not inconceivable that the combination of the Watch, AirPods and iPad could meet consumer needs for a different approach to mobile computing, essentially removing the need for a $1,000 iPhone. This would, of course, require greater functionality in the Watch and perhaps a more versatile design that sits between the iPhone XS Max and iPad today. However, as flexible display technology introduces a new means to fill this “gap” in the portfolio, it’s perhaps not too great a leap of faith.
An alternative scenario is that Apple produces a variant of its Watch that becomes even more focussed on personal health and well-being. The company has made no secret of its aspirations in this area, adding features such as electrocardiogram measurement in its latest model. A near-medical-grade Apple Watch could make even more sense as a standalone device and would doubtless carry a significant premium, delivering the kind of margins that Apple loves.
Apple must be thinking about a future beyond the iPhone, at least as it exists today, and developing the Apple Watch as a standalone device is one option. It has never been afraid to cannibalize its products in order to move forward.
It’s also interesting to note that the iPhone once needed a Mac or PC to start set-up in the same way that the Apple Watch needs an iPhone today. The more the Watch can operate independently but with greater integration with other Apple devices through software and services, the more valuable it becomes. And that’s before we get into the science fiction scenarios in which smartphones disappear completely, replaced by a combination of body-worn technology with the Watch becoming the main communication hub.
Time will tell what future Apple has in store for its increasingly successful portfolio of wrist-worn devices.
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