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  • So Maybe People Don’t Want an iWatch?

    June 25th, 2014

    On the heels of my recent commentary about what Apple might be doing to pave the way for an iWatch, an investment bank that engages in industry analysis, Piper Jaffray, suggested prospects were dim. This was all based on a survey that indicated that only 14% of those questioned would consider buying an iWatch if the price came in at $350.

    However, that's not the entire story. The numbers change substantially in response to the question of how many would buy one if it carried a lower price. Here the financial sweet spot is between $100 and $200, where 36% said they'd buy one, so if the iWatch comes in at $199, that might be an ingredient for success. In saying that, 41% said they wouldn't get one regardless of price.

    However, the real figure is that over 58% would buy an iWatch of some sort, depending on price. This is the number that the media will ignore, since it is perceived Apple's mythical gadget must be hugely expensive. Of course, if it has a built-in phone, it may well be that a carrier subsidy would reduce the price substantially. What's more, if the price were identical to the Pebble Steel, at $249, maybe that wouldn't be perceived as so much of a jump from the $200 level.

    This survey is highly misleading. You see, one of Apple's edicts is to build gear and/or add features that people didn't know they wanted, but loved once they became available. The fact of the matter is that the smartwatch space is little different from the digital music player space in 2001 before the iPod arrived. There's a growing number of products that pretty much carry a similar set of features, and similar form factors. None are mass market successes. But when you use them as the basis from which to judge the potential for an iWatch, it may well be that the demand isn't terribly high.

    But assuming Apple does make an iWatch, nobody really knows what it'll look like beyond the image of a normal wristwatch. Even though there are reports it is entering production, the situation isn't the same as the presumed iPhone 6, where there are loads of alleged photos of a case and internal components, supposedly leaked from the supply chain, which appear to fall within a similar range.

    The iWatch? We have seen concepts, but nothing that represents a component cribbed from the supply chain. We've heard speculation about OLED bendable screens, presumed screen sizes and the expected use of Apple's HealthKit and HomeKit technologies. But not a lick of it can be confirmed obviously.

    What this means is that the survey is seriously flawed. If it were taken after the final form factor and features of the mythical iWatch were revealed — and that would have to come from Apple — it might bear some validity. That it is limited to people with average household incomes of $130,000 means that the sampling is heavily weighted towards fairly well-off people, with a higher percentage of females. Worse, the sampling is small, some 100 people, which really impacts the accuracy.

    So one assumes that people with lower family incomes would be even less inclined to spring for an iWatch in any configuration. Regardless, you can be sure the survey will be used to advance the claims that people don't really want an iWatch after all.

    In contrast, a survey of 4,000 from RBC Capital Markets of smartphone owners appears to have more credibility. It reports that roughly half of those who were questioned that plan to upgrade their smartphones in the next three months have an iPhone in their sights. Of these, 25% would pay an extra $100 to get the rumored 5.5-inch iPhone 6.

    All right.

    Still, in addition to the larger sampling, this survey is more believable simply because the iPhone is a known quantity, and we have the existing form factor and features by which to judge an iPhone 6.

    Now I do not pretend to have a glimmer of an idea about the real demand for the iWatch. One based on existing products and possible pricing doesn't really count. I'm sure Apple's marketing team is quite aware on the impact of prices, but remember that the first iPod came in at $399, much more than the competition. People complained, but sales soared.

    But to command a higher price, Apple would have to offer something in an iWatch that's just not being duplicated in a Pebble, or a Samsung Galaxy Gear, or any other company's vision of a wearable gadget of this sort. It wouldn't just be to make a technology statement. Even the high-end Mac Pro is priced to appeal to a professional user for whom price doesn't matter all that much. It's about the ability to get work done, not just to look pretty or different.

    It's also obvious that Apple's recent pricing moves on the Mac platform reveal a sensitivity that some didn't expect. But I don't expect Apple to build an iWatch to meet a price point. Still, there may be several configurations that make fashion statements, which would mean there would be expensive versions that might be classified as jewelry in the fashion of an expensive traditional wristwatch. But the entry-level would be acceptable to a mass market — if the features, the look and the performance made a difference.

    So while I don't disapprove of surveys, I do think it's a little early to assume price resistance to an iWatch beyond what you'd expect for any product at a given price, however compelling.



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