Spring Forward: Analyst’s reaction to Apple Watch launch

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Apple launched its first wearable at Spring Forward event in San Francisco last night

Analysts have praised the launch of the Apple Watch but some warned that the iPhone-maker needs to prove to consumers why they need to buy a smartwatch.

CCS Insights chief of research Ben Wood took to Twitter to praise the Watch, which was officially launched by CEO Tim Cook (pictured) at Apple’s Spring Forward event in San Francisco last night (March 9).

Wood tweeted that the device was “pretty snappy and intuitive” after getting his hands on the |Watch, which goes on sale in the UK on April 24.

“Apple’s most valuable asset for Watch: dev community. Will have more compelling apps that any rival smart watch,” Wood tweeted from the event.

“Its all about the apps on Apple Watch. That’s key differentiator versus rivals. Uber, SPG, Instagram, Shazam etc. Huge breadth of des & apps supporting it are key.”

Confident pricing

The Apple Watch will launch with three different versions: Apple Watch Sport, Apple Watch Collection and Apple Watch Edition, with each version coming in two different sizes: 42mm (1.7in) or 38mm (1.5in). Apple watch edition

The Sport comes with an aluminium case in silver or space grey. It also has a strengthened “Ion X” display and is the cheapest variant, retailing from £299.

The Apple Watch comes in a stainless steal version, with twenty different models offered in the collection all determined by the watch straps, which come with in-built heart rate monitor. It retails from £479 for the 38mm version or around £50 more for the larger variant.

The most expensive version is the 18 carat gold limited edition Apple Watch Edition, which retails from £8,000 upwards.

IHS Technology director of mobile analysis Ian Fogg said the pricing decisions by Apple showed it had confidence in the consumer appeal of the new wearable.

“Unlike the original iPhone’s three main marketing messages, Tim Cook is pitching the Apple Watch as a versatile many-function device,” Fogg added.

Chinese market will boost sales

Apple announced that the Watch would officially be available for pre-order in nine countries on April 10 (pictured). The device will go on sale on April 24.

At the event, Tim Cook revealed that China is one of Apple’s fastest growing markets, where Apple now has 24 Apple Stores, a number that will grow to 40 by the end of the year. Screen Shot 2015-03-09 at 18.33.23

Ovum lead analyst for consumer technology Ronan de Renesse said the decision to include China as one of the initial launch countries could help sales of Apple Watch reach more than 10 million in 2015.

“Apple Watch will be one of the best smart watches out there but the lack of unique use cases for it means it will not have a significant enough competitive edge versus Samsung, LG and Sony,” de Renesse said.

“Also, cheap design copycats will successfully thrive, especially in China. But the China launch will help Apple pass 10 million Apple Watch unit sales in 2015, bringing over US$5 billion in revenues in its first year.

“Its comparatively high US$349 entry-level price point will be more difficult to sustain. Apple will have to go beyond just a great design and materials if it wishes to take the Apple Watch to the mass market and convince iPhone users who don’t wear a watch to wear one.

“While the iPhone and the iPad redefined their respective device segments when they launched, the Apple Watch will not play that role.”

Low smart watch penetration

A poll by Kantar Worldpanel Comtech found that 84 per cent of consumers were not planning to buy a smart watch at all, with only four per cent of those asked saying they definitely will.

Kantar consumer insight director Imran Choudhary said that the launch of the Watch reinforces Apple’s positioning as a luxury brand and said he expects sales to “dwarf” its Android Wear rivals. Screen Shot 2015-03-09 at 17.54.42

“Our figures show Smart watch penetration currently stands at one per cent in the UK,” Choudhary said. “Our data also reveals that 84 per cent of the country isn’t planning on buying a smart watch as 41 per cent claim their smartphone does everything they need, and hence a smart watch would be irrelevant.

“For Apple’s watch to really kick start this category, it would need to tackle three issues: the design, the relevance/applicability and the price. If Apple got the first two right, the price issue would take care of itself. Apple certainly dealt with the design point, producing the best looking smart watch available at the moment.

“No doubt loyal Apple fans will be buying this as soon as possible. But on the application and usability, will the ordinary iPhone owner see enough benefit? The answer lies in the Apps that are being developed. The Apple watch already has the most comprehensive set of apps available or in the works, with developers focussing on utilising the watch interface linking in with an iPhone.

“Apple will take a leading position in terms of market share, dwarfing its Android counterparts. You can already see the Apple watch being a top gift this Christmas. However, convincing enough of us to part with at least £300 will take some time and Apple may wish they had a slightly cheaper entry level price point if sales don’t take off as they hoped.”

Scraping the barrel

uSwitch analyst Ernest Doku praised the design of the Watch but said that the manufacturer seemed to be “scraping the barrel” to find unique selling points.

“Apple claims this is the most advanced timepiece ever created but some of the features seem like the tech giant was scraping the barrel for unnecessary unique selling points,” Doku said. “Digital Touch is essentially a personalised emoticons app with slightly classier graphics, for example. Apple flights

“But gimmicks aside, this really is a elegant and luxurious gadget, while also being extremely useful for health and fitness fans, who it’s heavily targeted at.

“Apple offers several versions of the same gadget in different metals, and a plethora of faces and straps, but that level of customisation is easily replicated by competitors.

“Pricing will dictate how fast Apple Watches fly off the shelves. Although it’s an aspirational brand, a starting price of £299 and rising into the thousands of pounds for a solid gold Edition means it’s hardly cheap and – given this is a first of its kind –we don’t yet know if it’ll deliver on its promises.

“Apple’s first foray into wearables will be heavily scrutinised but, if there’s one thing Apple is great at, it’s convincing us to buy another luxury gadget we never realised how much we needed.”

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