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iWatch watch: Apple is not here to entertain you

Jason Snell | April 15, 2014
Apple has only "60 days left to either come up with [an iWatch] or they will disappear," analyst Trip Chowdhry told CNBC last month. "It will become a zombie, if they don't come up with an iWatch."

Unfortunately, I fear that tech-industry observers have completely lost their perspective. As Rene has written, no matter how big the wearables market gets, it's still not going to touch the smartphone market.

IDC reported that in 2013, one billion smartphones were shipped, up 38 percent from the previous year. That's a fast-growing market worth hundreds of billions of dollars. Meanwhile, on Thursday IDC predicted that the wearables market will reach 112 million units in 2018.

In other words, in four years the wearables market might grow to be one-tenth the size of today's smartphone market--in units shipped. Presumably the average selling price of wearable items will be a fraction of that of smartphones, meaning the dollar value of the wearables market is even more minuscule compared to the smartphone market.

All of which means that wearables, while dramatic and exciting and with huge potential to change people's lives, are never going to rival smartphones in terms of market size. Same goes for smart TV boxes. These are interesting, fun areas of technological change. But the smartphone--that boring old Internet-connected 64-bit supercomputer in your pocket that just keeps improving year after year--is going to be the big dog in the tech world for years to come. Apple's future success or failure will be dependent on the iPhone, and to a lesser extent the iPad, not on a smartwatch.

In fact, the most plausible argument tying Apple's fate to its potential release of an iWatch is this: the wearables market could get really big, consumers could decide the best wearable tech runs on Android, and as a result they could stop buying iPhones. That scenario seems unlikely to me, because it would be hard for wearable makers to turn their backs on a large and lucrative iPhone installed base. But at least it's plausible.

That's (not) entertainment

So in the end, why do we want Apple to make an iWatch? Because it's fun to see new products from Apple. Because we want to try one out and see if we like it. Because we like to buy new gadgets. Because we want to complain about how Apple got it wrong. Or because we're residents of the financial sector and see everything in the context of growth, like a predator that can't see the prey standing still right in front of it.

And this is why analysts and journalists write dumb things about Apple all the time: Apple does not use the boredom of the public or the chattering of financial analysts to decide its product strategy. Just as a storyteller would be a failure if she gave the audience exactly what it thought it wanted--"and there was no conflict and everyone lived happily ever after, The End"--Apple would be a failure if it acted like a stand-up comedian desperate for the next laugh.

 

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