I remember when Bill Gates told me and a few others, that the most important real estate in the world was the square foot on top of your television set. It was 1992 and the set-top wars were raging. It turned out to be a war in which there were no victors. Bill’s prediction, like most of his predictions about the future of technology, was wrong. I actually believed he was right for a while until I realized that we had not yet reached the point where technology would allow for a device on top of the TV that would have the needed functionality, the TV did not have enough pixels and that the Cable Industry was not capable of letting this happen. That is when I secretly started up the Cable Modem project that I so often boast about on this blog.
Instead of the TV, it turned you that for the next twenty years or so, the most important real estate in the home was wherever your PC was located. It was the PC connected to high-speed residential broadband that created today’s internet. As we said then “The PC is it”. Ironically, by the time, true interactive capabilities came to the TV it no longer had a top at all, and Bill was long gone from his role as Microsoft Visionary. There was, of course, one important exception to this; game consoles where young males learned the manly arts of shooting automatic weapons, blowing up buildings and automobiles and abusing women. Game consoles made it to the top of the TV for a while. Even Microsoft benefited via the Xbox.
Apple failed to achieve a leadership role in the era of the connected PC. But then Steve Jobs realized that the most valuable piece of real estate was not always located in your home. No, it was in your pocket or your purse. With the launch of the iPhone in 2007, Apple changed the world of technology and in the process became one of world’s leading companies.
Soon there will be a new battle for real estate: A battle for what might be the most valuable real estate of all, your wrist. Apple fully intends to own it.
Importance of limited space
Right now there is a lot of attention evolution of TV industry. It is not clear that any one company will dominate the connected TV market. Flat panel TV’s not only come with many slots (HDMI) but many have their own capability to connect to the internet. I have an Apple TV; Chromecast and Amazon Fire connected to my TV. I could add several more devices if I liked. There is not much of a difference with respect to what I can do with these different devices. But I am pretty sure that there will only be one device on my wrist.
The Watch
Many people wear watches although younger people are relying more and more on their phones to check the time. Watches can also be status symbols. While some people own more than one watch, most do not. Those that wear watches tend to wear them most of the time taking them off when the wash or sleep. For those of us that have been around for a while, we can even remember when watches did not have batteries and had to be wound up by hand. My first experience carrying around a battery on my person was a watch and for many years it was the only object that I carried that had a battery.
Recently there has been a challenge to the watch as various fitness devices have sought to compete for the right to occupy your wrist. We now have devices that can track the number of steps, your heart rate and even blood oxygen levels. Companies like Fitbit and Withings are competing for the location where your watch normally lives.
By the way, I am aware that we all have two wrists but for some reason, we seem only to want to use one of these. So while this may change, I am going to act like we only have one useable wrist.
Why Apple wants to dominate the Wrist Market
I believe that Apple’s primary objective is to insert itself into the world of retail transactions. Because of iTunes, it now has more credit cards than any company including Amazon. I wrote about this concept before and pointed out the intersection of iBeacon, low power bluetooth and iTunes billing.
While the device that Apple will offer is so much more than a watch, I will refer to it as iWatch for now. Apple’s goal will be for you never to take off the iWatch. It will become part of you. And in a very real way, it will become you. For instance, it might not need to have a fingerprint sensor but will have some intrinsic way of knowing that it is attached to you.
Of course, it will know where you are and where you have been. It will know if you are with others that also have an iWatch and who they are. It will know your habits like no one knows including you. It will be capable of listening to your conversations and that of others. It will know what music you like and what TV shows you watch.
It will not be dependent on any other device like an iPhone, but it will communicate and integrate with these devices. The iWatch will have to have WiFi.
I could go on and on with ideas about the functionality but you have an imagination so please use it so I can finish this post.
The importance of wellness functionality
It is no secret that Apple is investing aggressively in wellness/fitness technology. Apple has hired some of the greatest experts in a number of very important wellness areas. I suspect that the iWatch will be able to measure very important psychological data including Blood O2 and Glucose. There will be a big emphasis on healthy sleeping that will require the owner of the iWatch to keep it on when they sleep. I don’t want to downplay the importance of health in connection with the iWatch. We will soon enter a major shift in healthcare with a much great emphasis on prevention and early diagnose of a disease. I am sure that Apple wants to have a big role in this not only for business reasons but because of what happened to Jobs and Tim Cooks commitment to fitness. However, the key is to make the iWatch the one piece of technology that you never leave behind.
Business Model
While the iWatch will be profitable but I can’t see it providing the kind of gross margin that Apple has gotten from the iPhone and iPad unless its price is beyond $500 which would limit it acceptance. But if I am right that the iWatch is tied to Apple’s intention to dominate retail transactions, they may be willing to sacrifice margin.
Major Challenges
There are many challenges to designing and producing the kind of iWatch that I envision.
- Style: The iWatch more than any other product that Apple will offer has to be stylish. Apple understands this. Therefore, it will not bring out the iWatch unless the available technology allows for a product that is both functional and stylish.
- Comfort will be very important.The idea here is to make sure the owner never takes it off. That also means it also has to be water proof.
- Power: If you never take it off, how do you charge it. I don’t know but here are a few ideas. It could be charged using RF (radio power) probably from a device on the night stand. It might be able to use solar, movement or even body heat.
- Functionality: The iWatch must have to have incredible functionality to dominate this market and to fulfill its mission of literarily being “always on”.
I think these are the kind of challenges that appeal to Apple. The iWatch provides the opportunity to once again define a category, and have a product that is clearly superior to anything else in the market. It is also an opportunity to create a lot of IP that it can use as a moat to protect its castle.
It is not clear when Apple will announce the iWatch. I suspect it will be in the fall, but it could be earlier. The first generation will, of course, fall short of my of the capabilities I have described, but you only have to look at the iPod and iPhone to see how Apple was able to add capabilities rapidly.
Want to have some fun
There are a lot of skeptics about the iWatch and some of them are pretty funny. Here is one in particular.
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