Apple Watch Series 1 - innovation copilots

Understanding the Apple Watch

Understanding the Apple Watch is hard.

In September 2014 Jean-Claude BIVER, President of LVMH Watchmaking Division (Tag Heuer, Zenith, Hublot) famously said:

This [Apple] watch has no sex appeal. It’s too feminine and looks too much like the smartwatches already on the market. To be totally honest, it looks like it was designed by a student in their first trimester.

The main difficulty is probably to step back and remind ourselves it’s merely a moving part one of the largest consumer ecosystem on the planet. In this ecosystem, every single added device exponentially increase the customer’s value of the free and the paid services provided:

Crédit Suisse Apple 2020
Crédit Suisse projecting Apple services at 33% of 2020 revenues.

Understanding the Apple Watch as a product is rather pointless. We need to switch to platform / ecosystem thinking. As such, the role of the Apple Watch is plain and simple: fit a gap in Apple network of devices, and propagate its ecosystem in more personal territory (your wrist).

This also explains why since 2014, the role of this product was difficult to pinpoint. Functionalities were not entirely afterthoughts, they were just not that important to set in stone yet. Pushing the ecosystem to a new frontier and only then assessing what will stick, has been the usual modus operandi of Apple since the iPhone in 2007.

What was a typical move from Apple as a platform was to secure long-term hardware leadership. And no, we’re not talking screen here, but micro chips. As I was already pointing in 2014 in an article in French, Apple was essentially making sure their watch will be as powerful as necessary when key applications will be obvious for everyone:

apple s1 - innovation copilots
Apple S1 micro chip unit specifically designed in 2014 for the Apple Watch.

Four years later, we can testify that Google missed the wrist race by relying on a Qualcomm partnership.

In retrospect, Apple Watch could have had killer payment or ticketing apps. It could have changed our social interactions with others more than Facebook or Twitter. It could have been a powerful home automation and security device. It could even have been a luxury device and a status symbol for Chinese « nouveaux riches ». (*)

All these options were open. They still are to some extent. It just happens that the market has been more interested in fitness and maybe soon on healthcare.

As someone pointed out to me again recently, in 2007 the first killer app was… its phone app. Understanding how involved we would get with Instagram, Twitter or Google Map on a phone was pretty much impossible at that point. Foreseeing that the iPhone in 2007 would be the major accelerant of Apple as a platform, would have been visionary (or plain lucky).

In 2018, understanding how the Apple Watch plays out in a platform strategy should not be that hard. But in reality, our collective brains are still caught up in the product, its design, the size of the screen and the battery life. We end up on being overwhelmed by Apple success at beating Rolex in sales, just a few years after being dismissed as a poor product by watchmaking rock-stars such as JC. BIVER.

What we keep on missing is that a platform cannot be assessed through only one part. If understanding the Apple Watch (or any new product from other platforms) is important for you, I would suggest adjusting your mindset and consider the interactions more than the products. This also means how other major platforms interacts or push back.

To conclude, I would say that the most important piece of information regarding the latest generation of Apple Watch for me, was that Google is now paying $9 billion a year (up from $1 billion previously) to make sure that its search engine is the default on… the iPhone

It’s never about the product itself, but the ecosystem. And critical news about any single part of this ecosystem impact the whole business. The more the iPhone or Apple TV or Apple Pay, gets traction, the more the watch gets powerful. And reciprocally.

If you want to beat the Apple Watch, I’m afraid that discussing screen, case, complications or straps won’t help you much… 

(*) We could have at this point a full on discussion on how Apple silently withdrew both the gold and ceramic editions of the watch, while still keeping a powerful partnership with both Nike and Hermès.

Published by

Philippe Méda

Philippe has been training about 200 startups a year since 2007, consulted for dozens of multinationals on rupture innovation or corporate incubation. He also teaches innovation in key MBA programs in Paris and Shanghai.