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Apple Watch Success Will Hinge on Apps That Make It Tick

Apple Watch Success Will Hinge on Apps That Make It Tick

By Brian X. Chen, The New York Times | Updated: 10 March 2015 09:43 IST

The value of a wrist watch is typically defined by its materials, design, features and brand. For the new Apple Watch, all those factors will apply, but so will something else: apps.

Apple on Monday held a media event to explain how its long-awaited Apple Watch works and how much it costs. Just as important, it also demonstrated what the watch was capable of doing with apps made by other companies.

(Also see: Apple Watch Available April 24; High-End Variant to Cost $10,000)

If the watch is going to be a success, those other companies will have a lot to do with it because few devices - not even those made by Apple - will sell well without the help of a whole lot of app developers.

"All of Apple's devices really come alive with third-party apps, and it'll be the same with the watch," said Jan Dawson, an independent technology analyst for Jackdaw Research.

When Apple released the iPhone in 2007, it was essentially a blank slate. When the App Store opened a year later, the device became much more than a fancy phone. Just by downloading an app, the iPhone could become a musical instrument, a medical device, a TV remote and gaming device. It became the ultimate Swiss army knife of gadgets.

For the Apple Watch to be remotely as successful, Apple will have to find a way to take that world of apps to the wrist. But a watch presents unique challenges with its tiny screen. And the way app developers make money from it will be different than with other Apple products.

Unlike the iPhone or iPad, the Apple Watch is not a stand-alone product. It relies on an iPhone to fully operate, partly because the brains of watch apps will live on the iPhone. So users will have to install watch apps on the iPhones as well.

The economics of that combination are tricky. Developers working on watch apps have to make an iPhone app first and expand it to include support for the watch. And it remains unclear whether they can double dip. Apple has not said whether developers can charge for the iPhone app, then charge again for the watch extension of the app.

Still, companies are trying, even though some are worried the watch's tiny screen can limit features or - even worse - ads.

Christian Gaiser, chief executive of Retale, said his company found a path to using a watch app to complement its smartphone app. Retale's iPhone app displays weekly deals for retailers like Wal-Mart and Target.

Retale users who see something they want to buy in the iPhone app can push the nearest location of the retailer to the watch app, which will map out turn-by-turn directions on the watch screen. Retale collects fees from retailers whenever customers engage with their ads, so the watch app is meant to increase usage of the smartphone app, Gaiser said.

At its event, Apple also demonstrated an app from Uber, the ride-sharing service, to summon a car. The watch app shows where the driver is on a map, and from there, the user can place a phone call to the driver.

Apple also rolled out an app developed by Starwood Hotels. Starwood's iPhone app can be used to book a hotel room. The watch app sends a notification to the watch wearer when he or she is near the hotel. When the guest arrives at the hotel, the watch app shows the room number, and after that the watch can unlock the user's room door just with a hand wave over the lock.

"The end goal is to build loyalty with our most valuable guests," said Chris Holdren, who led development of the Starwood watch app. "It continues to deepen the relationship we have with them."

Unlike past Apple products, the Apple Watch has a complex pricing structure. Because a smart watch is both device and fashion accessory, Apple designed the watch to be highly customizable to suit the tastes of various users, from fitness buffs to collectors of luxury watches.

Apple will offer three models, each with a casing made of a different material: Watch Sport, a version with an aluminum case; Watch, which has a stainless steel case; and Watch Edition, which has a case made of 18-karat gold.

Each model comes in two case sizes - 1.5 inches and 1.65 inches. And for each watch, customers will be able to choose from a variety of interchangeable bands in different colors and materials.

The cheapest model is the Apple Watch Sport, the one tailored to athletes, which starts at $350. The larger Apple Watch Sport costs $400.

The next step up is the Apple Watch, with a more fashionable stainless steel case. The smaller version of this watch costs $550 to $1,040, and the larger one costs $600 to $1,100. The price range for both depends on the band.

The golden Apple Watch Edition is a sure sign that Apple has entered the luxury market. Pricing for this high-end version starts at $10,000.

Preorders start April 10, and it will go on sale April 24. It will first be available in a select number of countries, including the United States, Australia, China and Japan.

At the event, Apple also stressed some of the signature features of the device.

The company has highlighted the crown as its latest signature innovation for controlling a device, similar to the mouse for the personal computer, the click wheel on the iPod and the touch screen for the iPhone. On the Apple Watch, the crown can be twisted to zoom in or out of the screen or to scroll through a Web page.

You can take and even make phone calls, as long as your iPhone is nearby.

"I have been wanting to do this since I was 5 years old," said Tim Apple's chief executive.

The watch includes a heart rate sensor and a sensor for tracking movement to complement fitness applications. It has a chip that helps it make wireless payments.

The watch also includes Digital Touch, an application that enables a new method of communication between watch users. Watch wearers can scribble sketches on the watch screen and send them to one another, or even send their heartbeats.

Apple also added to the watch a so-called taptic engine, which taps users on the wrist with a tactile sensation when they receive alerts, messages or notifications. Apple said the watch's battery would last 18 hours.

Apple also announced a new MacBook laptop with a 12-inch high-resolution "retina" display. It weighs 2 pounds and measures 13.1 millimeters at its thickest point. It also includes a new port called USB-C. It is a versatile port that can be used for charging, plugging in a video monitor, or hooking up a USB accessory like a keyboard.

The MacBook's starting price is $1,300 and it begins shipping April 10.

Apple on Monday also released upgrades for some of its other notebooks, including the MacBook Air.

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