Apple Watch Bringing the Internet of Things

Apple has a rich history of disrupting the technology landscape. When Apple unveiled its Apple Watch in 2015, the company hoped it would follow in the footsteps of its iPod, iPhone, and iPad. So far, the Watch has not been a smash hit, but it is selling relatively well with strong growth potential.

The Apple Watch is a prominent example of wearable technology, a fast-developing field with potential applications in healthcare, medicine, fitness, and many other areas. Examples of wearable technology include wristbands and watches, smart clothing and footwear, and smart glasses. The proliferation of smaller, more compact, more powerful devices and the resulting improvements in computing power have made wearable computing possible.

Analysts view wearable computing as an industry primed for growth in the near future. Over 115 million wearable computing devices were shipped in 2017; that number is projected to grow to over 190 million units by 2022. The global market for wearable computing products is expected to grow to over $170 billion by 2021. However, the market for wearable computing is evolving so quickly that even these projections could quickly become obsolete. Apple ended 2017 as the industry leader in wearable computing for the first time, and in the first quarter of 2018, sales of Internet-enabled wearables like the Apple Watch grew 28.4%, compared to a 9.2% decline in basic wearables such as Fitbit, which only perform simple, offline functions like step tracking. Apple is poised to establish a dominant position in this market going forward, with 59% of the cellular-enabled smart watch market as of 2018.

Apple originally conceived of the Watch as a filter for the iPhone, only notifying users when truly critical information required attention. The Apple Watch prioritizes speed and simplicity above depth of engagement. Apple also placed its typical emphasis on elegant design when developing the Watch, which features a scrolling wheel called the Digital Crown and a screen that senses different levels of force applied by the user’s touch and responds accordingly. On the back of the watch are sensors that can monitor the user’s vital signs and movements. Movement is used to control many functions of the Watch; for example, lifting an arm to view an incoming text message, and lowering it again to hide it, saving it for later.

Perhaps the most unique component of the Apple Watch is the Taptic Engine, a feature that applies gentle pressure to the skin to deliver information and alerts to the user. Watch wearers are alerted to different types of incoming information depending on the number, cadence, and force of the taps. Different taps designate incoming phone calls, upcoming meetings, text messages, and news alerts. The Apple Watch might someday tap you to let you know that you’re leaving the house without a winter coat on a cold day, or that your blood sugar is low, and you need to eat.

The Watch launched with 3,500 apps available and has continued to add more apps focused on fitness, sleep tracking, weather, music and entertainment, travel, productivity tools, finance, and even some simple games. Major online retailers have also sought to create apps for the Watch, such as eBay, and Amazon, as well as bricks-and-mortar retailers like JCPenney, Kohl’s, and Target. The latter group hopes to add features that improve the in-store shopping experience for Watch wearers. Users might be able to use a retailer’s Watch app to avoid long lines in stores, find items more efficiently with interactive store maps, and pay for their purchases with Apple Pay using the phone’s built-in Apple Pay button on the underside of the phone. However, in 2018, Apple announced a change to its operating system requiring that apps no longer require an iPhone to refresh data or perform key functions, disabling many prominent apps in the process. Instagram, Slack, eBay, and Amazon’s apps were all discontinued due to the change, and while many of these companies are working to develop new versions, some may decide that the Apple Watch is not the ideal interface for the service they provide.

Apple Watch Bringing the Internet of Things

In 2018, Apple announced the upcoming release of its watchOS 5 operating system, which will add another set of useful features. The Watch will now automatically detect when its user is exercising and is equipped with more workout types to help users better track calorie consumption. Apple also released a version of its Podcast app that will allow Watch users to listen to their favorite podcasts without the involvement of another device. Watches running OS 5 will gain the ability to connect to a Wi-Fi network without the use of an iPhone. These improvements come on the heels of others Apple made in 2017, including updates to Siri, peer-to-peer payments with Apple Pay, and upgrades to Apple Music for the Watch.

Apple is also working on several medical applications for the device, including a non-invasive glucose monitor for diabetics, and the company has filed patents relating to the possibility of measuring respiration rate. FDA rules now allow Apple to more easily market the Watch as a health device, which could dramatically increase the Watch’s target audience. A common criticism of the Watch in the early going is that anything it can do; the iPhone can do faster and better. But Apple has placed a clear emphasis on promoting features and apps that run natively on the Watch, and as Apple continues to work on biometric features in addition to its entertainment offerings, the Watch could become a must-have device for many different types of consumers.

Apple Watch Bringing the Internet of Things

Apple released a new version of the Watch in September 2018, the Apple Watch Series 4. The most attention-grabbing features were the addition of new health and motion sensors and apps that can deliver an FDA-approved medically accurate electrocardiogram and send alerts to emergency personnel when a person falls. Other improvements include a new processor that makes the Series 4 twice as fast as the previous version, and a 30% larger screen. Apple will also continue to work with prominent designers to separate the Watch from traditional fitness tracking devices.

Apple will face continued opposition from other wearable manufacturers such as Xiaomi, Fitbit, Garmin, and Huawei, but Apple has rapidly gained market share and overtaken its competitors. Fitbit in particular had a very difficult 2017, declining 28% from 2016 due to shrinking demand for simple fitness trackers without Internet connectivity. Google’s Android Wear and Samsung’s Gear series of smart watches also represent threats to Apple, but Apple has focused on making constant improvements to the Watch’s battery life, weight, speed, and other features. Although some analysts have pronounced the Watch a disappointment by Apple’s lofty standards, in a few years’ time the Watch may emphatically prove its doubters wrong.

Practice Question 1

For 2019 Edition only

Required:  Read The case Apple Watch, (Laudon p. 147-148) and answer the following question

1. Offer two revenue models that could work for providers of augmented reality services. For each one explain the value proposition and the revenue model. (4 marks).

2. List one other development that has occurred since the date this case was written in September 2015? (2 marks)

Practice Question 2

 Required:  Read closing case, Akamai Technologies p. 178-181 and answer the following questions:

1. Why does Akamai need to geographically disperse its servers to deliver its customers’ Web content? (2 marks)
2. What advantages does an advertiser derive from using Akamai’s service? What kinds of products might benefit from this kind of service? (2 marks)
3. Do you think Internet users should be charged based on the amount of band-width they consume, or on a tiered plan where users would pay in rough proportion to their usage?. (3 marks).

Expert Partial Solution

List one other development that has occurred since the date this case was written in September 2015?

On 10^th September this year, Apple Company launched Series 5 watch that replaced the Apple Watch Series 4. As opposed to the previous models, Series 5 design changes are comparatively radical. For example, its screen is bigger but flatter compared to Series 4 and the rest. The new product has a Compass App that shows the user the direction the watch is pointing,…read more

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Apple Watch Bringing the Internet of Things