Apple Watch and why IoT matters the most

Smartwatches have always been gadgets that have fascinated the society in general. For some the thought of having coputing power right on their wrists fascinates them while for others the repeated appearence of smartwatches in science fiction movies has fascinated them. The smartwatch has been a crowded market ever since Pebble came to the scene. After finding success with its Pebble smartwatch,Pebble has reinvigorated interest in a market which was rather dead after the failed attempts of Microsoft's SPOT and IBM's WatchPad.

A ton of companies have come to the smartwatch scene. The first was Samsung with the release of its Galaxy Gear that ran a custom version of Android and was later updated to Tizen. After Galaxy Gear, a continuous stream of smartwatches came to the market. This was the result of Android Wear which was a modified version of Android specifically designed for smartwatches. Companies such as LG, Sony, Asus, Samsung and Motorola launched their smartwatches running on Android Wear or some custom software. Some companies like Motorola released just one smartwatch whereas others like Samsung continued to refine/diverse their options and released multiple smartwatches.

Despite the recent interest in smartwatches because of Pebble's success, they are far from mainstream. Smartwatches are still a niche product and except for tech savvy users,adoption amongst the general public is still very low which was evident with the fact that Android Wear did not manage to ship more than 1 million units and Pebble has touched the 1 million milestone after almost a year or so. Many industry pundits have predicted that the smartwatch category will become popular after Apple's debut of Apple Watch. After all for the past decade or so with products such as the iPod, iPhone and iPad Apple has revolutionized and changed the image of every industry it has stepped into.

Apple is entering a crowded market. There are already a plethora of smartwatches present from various companies at prices much cheaper than the Apple Watch.

There are basically three core functions of a smartwatch

1. Display notifications
2. Track fitness related data
3. Connect with other objects and perform tasks.

Displaying Notifications

Displaying notifications is probably the most core function of a smartwatch and something that every smartwatch maker is placing emphasis on. Google's Android Wear already provides notifications/suggestions in the form of cards. Pebble also placed emphasis on notifications with the launch of Pebble 2nd Gen and subsequently timeline. Apple Watch also displays notifications when connected to the iPhone. For its part Apple has made use of Glances and a special form of Haptic Feedback to make notifications on the Watch seem different. Almost every competing platform has some method or the other to display notifications.

Tracking fitness related data

Apple Watch comes loaded with a bevy of sensors to track fitness related data and analyze them using HealthKit. Pebble doesn't do as good as its competitors when its comes to fitness tracking but smartwatches from Android Wear manufacturers especially Samsung do a decent job of tracking fitness data. If we leave the smartwatch category for a moment and enter the wearables category in general then Apple has tough competiton to face. Fitness wearable makers such as Jawbone and Fitbit have some really amazing and well selling fitness trackers that track all forms of health - related data. In fact companies like Jawbone and Fitbit have a more established and wider werable market than the nascent smartwatch market which Apple is entering.

Connect with other objects and perform tasks -

This is the lesser know facet of a smartwatch which is its ability to connect with other devices and perform specific functions. This entire concept is based upon IoT i.e Internet of Things. Within few years a lot of devices such as your car, your water heater,your door,your windows,your fridge etc will be connected to the internet. Since they are connected to the internet,functions can be performed on them remotely without having to be present there in person to control the device. 

This is where a smartwatch's real strength lies. It can be to control various IoT devices. This facet of using a smartwatch as a to control IoT devices isn't well executed by any of the smartwatches such as Android Wear or Pebble. This is what Apple can execute better than any other smartwatch maker and make this as a point of differentation in an otherwise crowded and similar market.

Use cases of IoT

There are infinite use cases of IoT,I will list some of them down here

1. Being able to make payments is one of the best use cases of Iot and Apple has already achieved the same through its Apple Pay.
2. Imagine being able to unlock your door just by showing your watch at the door. The NFC chip in Apple Watch can communicate with your door lock and authenticate that its you.
3. Imagine your TV alerting you on your Apple Watch when your show is about to begin or you being able to ask your TV to record your favourite show when you're busy in the Kitchen.
4. Imagine if Apple Watch can command you water heater to start heating the water exactly 20 mins before your morning alarm.
5. Imagine the lights and fan switching on and off as and when you leave your room since your Apple Watch is tied to your hand and thereby is a perfect location emitter to know where exactly a person is.

The use cases of IoT are infinite and this is what will help Apple differentiate the Apple Watch from the competiton.

Apple is best positioned to capitalize on the upcoming IoT trend mainly for four reasons.

•  Iot capable gadgets will come expensive at first and only people with enough disposable income will be able to afford them, this is exactly the market which Apple is targeting which is evident from this chart at Counterpoint. In most markets except the US, Apple dominates more than 75% of the $500+ smartphone market which generally falls under the high end category.

• Even if initially third party support is low, Apple controlling both the hardware and software is another advantage for it to successfully develop a robust IoT ecosystem around the Apple Watch in house. This was very evident with the successful launch of Apple Pay. Google Wallet for example in contrast failed to gain as much traction.
  
  This was in part because manufacturers/carriers wanted to promote their own payments platform for example ISIS and did not pre - load Google Wallet. With Android Wear, Google tried to circumvent this problem by limiting the amount of customization a manufacturer could do on Android Wear, but this iron-fist control of Google on Android Wear led to a unique problem where a lot of top manufacturers such as Samsung and LG started using their own OSes for smartwatch like Tizen and WebOS. Since Google doesn't manufacture any Andorid Wear smartwtach on its own, it has to depend on its partners. Apple doesn't suffer this problem one bit, with everything from hardware to software to services,all being under its control.
•  Apple has the scale required to have IoT manufacturers interested. Despite its expensive price tags,the iPhones continue to sell boat loads every after year. Just last quarter for example Apple tied neck to neck with Samsung for the sales of its iPhones and was amongst the largestmanufacturer on earth. Although there is no guarantee that Apple can acheive the same scale with the Apple Watch but the  $40-45 million Apple is spending on marketing will definitely help Apple sell millions of these. In fact many analysts have estimated that for 2015 Apple will easily sell around 10-15 million Apple Watches depending on which research company you put your money on. Its not as impressive as the iPhone but when compared to the less than million shipments of Android Wear and almost a million shipments of Pebble, it does seem big comparatively. Such huge scale will definitely entice more manufacturers to adopt HomeKit, so that their device/appliance is able to work with Apple Watch.
• Apple has already done this in the past. For example with the launch of iPod, iTunes came into existence. With the launch of iPhone, the App Store came into existence. What iTunes did for the iPod and App Store did for iPhone, HomeKit will do the same for Apple Watch i.e differentiate it from the remaining devices on the market.

Conclusion 

I am not trying to say that its only with HomeKit that Apple Watch will succeed, maybe Apple Watch can succeed(if it ever succeeds) by just showing notifications and tracking fitness but that will make it similar to the plethora of smartwatches already present in the market. Apple Watch without a strong IoT ecosystem around is the iPhone without its App Store. Without the App Store the $600 iPhone would be similar to the  $20 Nokia feature phone in terms of function. Its just that the iPhone looks better, has a better UI and has better internals. This is how the Apple Watch is currently. It looks better, has a better UI and has better internals than the competition but in terms of function its still almost on par with the rest of the smartwatches/wearaes on the market currently. In terms of function what really makes the $600 iPhone better than the $20 Nokia feature phone is its App Store. Similarly even for Apple Watch to be functionally superior over its competition, I personally feel it needs a strong IoT eco-system developed around it.

*By Viranch Damani.